U.K. Stocks Gain, Led by Aviva, ARM; BP Rises for First Time in Four Days
U.K. stocks rose, with the FTSE 100 Index climbing for the first time in four days, amid optimism the economic recovery in the U.S. is broadening and as investors speculated BP Plc shares have fallen too far.
BP gained for the first time in four days as it grapples with efforts to stop the Gulf of Mexico oil leak which has wiped a third off the value from its stock since April 20. ARM Holdings Plc rallied 5 percent as Gartner Inc. raised its forecasts for global chip sales. Aviva Plc rose 4.1 percent after Goldman Sachs Group Inc. recommended buy the shares.
The benchmark FTSE 100 Index climbed 59.86, or 1.2 percent, to 5,211.18. The measure has slumped 11 percent from this year’s high of April 15 amid concern that Europe’s debt crisis will hurt the economic recovery. The FTSE All-Share Index gained 1.2 percent today and Ireland’s ISEQ Index also rose 1.2 percent.
“The world has gone mad on BP,” Andy Brough, a fund manager at Schroder Investment Management in London, said in a Bloomberg Television interview. “The cash flow of BP is very, very strong.” The company’s dividend “will be fine,” he said.
BP should suspend its annual dividend until clean-up and liability costs are determined, U.S. Democratic Senators Ron Wyden of Oregon and Charles Schumer of New York said yesterday in a letter to BP’s Chief Executive Officer Tony Hayward.
BP Plc rose 0.6 percent to 432.25 pence, snapping a 17 percent slide over three days to the lowest level in more than a year. The fall since April 20 has pushed to price-to-earnings multiple on the stock to 6.1, the lowest in more than a year. The shares pared an earlier gain of as much as 4.7 percent after Fitch Ratings and Moody’s Investors Service downgraded the company’s credit ratings.
Energy shares rallied 2.2 percent for the biggest gain among the 19 industry groups in the Stoxx Europe 600 Index. Royal Dutch Shell Plc, Europe’s largest oil company, gained 1.5 percent to 1,841 pence. Petrofac Ltd., an oil services provider, surged 5.2 percent to 1,199, the biggest gain in the FTSE 100.
The number of Americans seeking jobless benefits last week fell by 10,000 to 453,000, government figures showed today. The release comes a day before the U.S. Labor Department’s monthly jobs report. Payrolls climbed by 523,000 in May, the fifth straight month of gains and the biggest since 1983, according the median forecast.
ARM, the U.K. designer of semiconductors used in Apple Inc.’s iPhone, rallied 5 percent to 267.9 pence. Global semiconductor sales are forecast to grow 27 percent this year compared with a February projection of a 20 percent gain, researcher Gartner said. Aviva climbed 4.1 percent to 339.1 pence, the highest level in three weeks. Goldman Sachs upgraded the U.K.’s second-biggest insurer to “buy” from “neutral” and added the shares to its “conviction buy” list, saying “Aviva’s share price has been disproportionately affected by European sovereign credit concerns and the potential for a large rights issue in the sector.”
Johnson Matthey Plc advanced 1 percent to 1,570 pence. The producer of a third of all autocatalysts reported sales of 7.84 billion pounds ($11.5 billion) in the year to March 31, compared with 7.85 billion pounds a year earlier.
Kingfisher Plc climbed 2.6 percent to 229.6 pence. Europe’s largest home-improvement retailer reported a 15 percent increase in first-quarter retail profit.