U.K. Stocks Rise; Mining Companies Rebound on China Data
U.K. stocks climbed, led by a rebound in mining companies, after Chinese economic data heightened speculation authorities will roll out additional measures to support growth.
Kazakhmys Plc (KAZ) and Vedanta Resources Plc (VED) both rose at least 3.5 percent as copper rallied for a third day. ITV Plc (ITV) jumped 3.7 percent as investors speculated the company may become a takeover target. BT Group Plc (BT/A) paced a rally in European phone companies.
The FTSE 100 (UKX) Index gained 57.88 points, or 1 percent, to 5,666.13 at the close in London. The volume of shares changing hands on the gauge was 26 percent lower than its 30-day average, according to data compiled by Bloomberg. The broader FTSE All- Share Index also added 1 percent today, while Ireland’s ISEQ Index increased 0.9 percent.
China’s gross domestic product expanded 7.6 percent last quarter from a year earlier, according to the National Bureau of Statistics. The pace, a three-year low, compares with an 8.1 percent gain in the previous period and the 7.7 percent median forecast of economists.
Investors “had positioned themselves for worse, so in that regard, 7.6 percent is certainly a win,” said Chris Weston, an institutional trader at IG Markets. “We feel the numbers are probably the best-case scenario for risk assets, as the print was just weak enough to keep the markets’ anticipation of aggressive easing alive.”
Separate data also showed that Chinese industrial production increased at a slower pace in June, while retail sales growth decelerated.
Stocks fell yesterday, led by a retreat in commodity shares, after minutes from the U.S. Federal Reserve’s latest policy meeting failed to signal more stimulus measures to spur economic growth. The FTSE 100 has still advanced 7.7 percent from its 2012 low on June 1.
A gauge of mining companies climbed 2.9 percent, advancing for the first time in three days as copper led base metals higher on the London Metal Exchange.
Kazakhmys jumped 6.1 percent to 744 pence, Vedanta Resources added 3.5 percent to 914.5 pence, BHP Billiton Ltd. rose 3.1 percent to 1,805.5 and Antofagasta Plc (ANTO) rose 3 percent to 1,071 pence.
ITV climbed 3.7 percent to 74.95 pence amid speculation the broadcaster may become a takeover target after Japan’s Dentsu Inc. agreed to buy Aegis Group Plc for 3.16 billion pounds ($4.9 billion) yesterday.
Alex de Groote, an analyst at Panmure Gordon & Co. in London said the Aegis’s takeover offer is “probably” driving ITV’s shares today.
The “market is making a read-across that other companies out there are attractive as potential bid targets,” he said in a phone interview.
BT Group increased 3.5 percent to 222.3 pence. JPMorgan Chase & Co. said in a note to clients that all fixed-line companies will benefit from yesterday’s decision by European Union regulators not to force firms to provide discount prices for access to their copper networks.
EU Digital Agenda Commissioner Neelie Kroes yesterday said lowering prices would not encourage greater investment in faster broadband networks.
G4S Plc (GFS) fell 1.5 percent to 278.7 pence, extending yesterday’s 2.6 percent retreat, after the company failed to arrange enough security for the London Olympics.
The U.K. government yesterday said it will deploy 3,500 extra soldiers to provide security at the Olympics after G4S, the company with the contract to protect the games, said it won’t have enough staff available.
U.K. Home Affairs Committee Chairman Keith Vaz has asked G4S Chief Executive Officer Nick Buckles to testify on the shortfall in Olympic security guards on July 17.
Experian Plc (EXPN) retreated 2 percent to 932 pence as the company said it was “mindful of tougher conditions in some markets including the euro zone.” Experian today reported a 7 percent increase in total revenue for the first quarter, led by Latin America.
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