U.K. Stocks Climb For Fourth Day as Banks, Man Group Gain
U.K. stocks climbed for a fourth day, the longest stretch of gains in six weeks, led by a surge in Man Group Plc amid continued speculation the hedge-fund manager may be a takeover target.
Man Group jumped 14 percent as Societe Generale SA upgraded the shares and the company repurchased debt. CRH Plc and British Land (BLND) Co. rose more than 2 percent as analysts recommended the companies. Barclays Plc advanced.
The FTSE 100 Index rose 0.5 percent to 5,777.11 at the close in London, extending its longest stretch of gains since March 13. The FTSE All-Share Index increased 0.6 percent today, while Ireland’s ISEQ Index added 0.9 percent as Standard & Poor’s affirmed the country’s BBB+ rating.
“The gloomy macro picture has not been enough to deter investors from pushing the FTSE a little higher,” said Angus Campbell, head of market analysis at Capital Spreads. “They continue to be attracted by solid corporate earnings.”
U.K. stocks climbed yesterday after earnings from Unilever to Royal Dutch Shell Group Plc outweighed worse-than-expected economic data. Still, the FTSE 100 (UKX) has lost 3.2 percent from its 2012 high in March amid renewed concern policy makers are struggling to contain the debt crisis.
Gains were limited on the FTSE 100 today after Standard & Poor’s downgraded Spain’s sovereign credit rating and U.S. data disappointed investors.
U.S. gross domestic product increased at a 2.2 percent annual rate after a 3 percent pace, Commerce Department figures showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 2.5 percent rise.
In Ireland, S&P affirmed the nation’s credit rating at BBB+ with a negative outlook. The rating company revised the country’s deficit target to 7.5 percent of GDP from 10.3 percent and said the government should come close to the 2013 target.
Man Group (EMG) surged 14 percent to 107 pence, the biggest advance since November 4, as Societe Generale upgraded the world’s largest publicly traded hedge-fund manager to buy from hold after a 35 percent drop in the shares in recent weeks.
“Negative momentum is too great given the proven fundamentals for the business,” Michael Sanderson, an analyst for Societe Generale in London, wrote in an e-mailed note today. “Upside could emerge from further cost reductions. A bid for the company, while more likely than in the past, remains in our view a low probability outcome.”
UBS AG earlier in the week said the company was a “likely” takeover target. Arnaud Giblat wrote in a report on April 23 that Man Group could be attractive to a bidder because of its sales and distribution relationships in Japan and the rest of Asia.
Man Group also today said it will repurchase 165 million euros ($219 million) of its 600 million-euro, 6 percent notes due 2015. The shares are still down 15 percent this year.
CRH (CRH) rallied 3.9 percent to 1,268 pence in London after JPMorgan Chase & Co. upgraded the world’s second-biggest building-materials maker to overweight from underweight, meaning investors should now hold more of the shares than are represented in benchmark indexes.
The company’s Americas Products unit may provide a “huge upside” surprise as it benefits from a recovery in the private sector, according to Michael Morris, a London-based analyst with JPMorgan Chase & Co.
French builder Vinci SA also today reported first-quarter sales that beat analyst estimates.
Wolseley Plc (WOS), the world’s largest supplier of heating and plumbing products, increased 1.8 percent to 2,400 pence.
British Land gained 2.8 percent to 497 pence after JPMorgan upgraded U.K.’s second-largest real-estate investment trust to overweight from neutral, saying the company is “well positioned with its quality portfolio and secure cash flow.”
Barclays rallied 4.7 percent to 223.1 pence. The lender, which this week reported profit that topped analyst estimates, pledged to reduce pay levels as it tries to fend off an investor revolt over executive compensation.
Twenty-seven percent of shareholders voted against Chief Executive Officer Robert Diamond’s 12 million-pound ($19.5 million) compensation package.
Those opposed failed to block the bank’s remuneration plans as more than 73 percent of investors who voted supported it, London-based Barclays said in a statement after its annual investor meeting today. About 10 percent voted down Barclays’s pay plans last year.
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