U.K. Stocks Rise on Industrial Production; Xstrata Jumps
Lloyds Banking Group Plc (LLOY), Royal bank of Scotland Group and Barclays Plc (BARC) climbed more than 2 percent. Xstrata Plc jumped 3.6 percent as Glencore (GLEN) International Plc boosted its takeover offer for the mining company by 9 percent. Glencore’s shares declined 3.6 percent. British American Tobacco Plc (BATS) and Imperial Tobacco Group Plc dropped at least 2 percent.
The FTSE 100 gained 17.46 points, or 0.3 percent, to 5,794.8 at the close in London, bringing this week’s increase to 1.5 percent. The benchmark gauge has climbed 10 percent from its 2012 low on June 1 as European Central Bank policy makers agreed to an unlimited bond-purchase program in an effort to protect the euro. The broader FTSE All-Share Index advanced 0.4 percent today, while Ireland’s ISEQ Index jumped 0.8 percent.
“Previous market bounces on euro-zone euphoria have been short-lived,” said Chris Beauchamp, a market analyst in IG Index in London. “I suspect that this one has more life to it.”
U.K. industrial production soared in July as manufacturing rebounded from disruption caused by the extra public holiday for the Queen’s Jubilee. Production rose 2.9 percent, the most since 1987, after falling 2.4 percent in June, the Office for National Statistics said today. The median forecast of 28 economists in a Bloomberg survey was for a gain of 1.5 percent.
The volume of shares changing hands in FTSE 100 companies was more than double the 30-day average today, according to data compiled by Bloomberg.
The FTSE 100 surged the most in a month yesterday after ECB President Mario Draghi said policy makers agreed to an unlimited bond-purchase program to help regain control of interest rates in the euro area.
U.K. shares pared their advance today as a U.S. Labor Department report showed payrolls rose at a slower pace last month. Employers hired 96,000 workers in August, down from a revised 141,000 in July. That missed the median forecast of 130,000 in a Bloomberg survey of economists. The unemployment rate unexpectedly dropped to 8.1 percent.
“The jobless number left us in a limbo,” said Jakup Petur Baerentsen, a chief equity adviser at Nordea Private Bank in Copenhagen. “It wasn’t strong enough to show the economy improved, while not making the case for more stimulus from Federal Reserve more or less likely.”
Banks paced gains on the FTSE 100 today. Lloyds, the U.K.’s second-biggest government-aided bank, added 2.3 percent to 37.02 pence. Barclays increased 6.9 percent to 206.4 pence and RBS advanced 4.7 percent to 244.5 pence.
Xstrata (XTA) soared 3.6 percent to 1,014 pence after Glencore, the world’s biggest commodities trader, increased its proposed takeover bid to 3.05 shares for each Xstrata share.
Xstrata investors including Qatar Holding LLC had sought a higher bid from Glencore and had planned to vote against the previous 2.8-share offer. Glencore retreated 3.6 percent to 378.05 pence.
A gauge of miners led advances after China approved new infrastructure projects, supporting the demand outlook in the world’s biggest copper consumer. The government-backed construction plans including roads and warehouses, statements on the National Development and Reform Commission’s website showed. That followed approval this week of higher spending on railroads.
Ferrexpo Plc (FXPO), the maker of iron ore pellets for steel production, jumped 18 percent to 182.8 pence, while Rio Tinto Group, the world’s third-largest mining company, advanced 6.2 percent to 3,021 pence. Evraz Plc (EVR), the mining company and steelmaker part-owned by billionaire Roman Abramovich, soared 15 percent to 260.4 pence.
British American Tobacco, Europe’s largest cigarette maker, retreated 2 percent to 3,173.5 pence and Imperial (IMT), the second- biggest, fell 3.5 percent to 2,262 pence.
The companies have declined more than 4 percent this week as Russia said it will submit a law banning smoking in public places to parliament by Nov. 1 and reports said France plans to remove branding from cigarette packs.
GlaxoSmithKline Plc (GSK), the U.K.’s largest drugmaker, dropped 2 percent to 1,409 pence, the biggest decline in two months. Morgan Stanley analysts said they preferred AstraZeneca Plc to Glaxo in 2013, citing risks to Glaxo’s margin expansion.
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