U.K. Stocks Gain for Third Day; Barclays Climbs
U.K. stocks advanced for a third day as Barclays Plc led a rally in banking shares, outweighing a decline in BHP Billiton Ltd.
Barclays contributed the most to gains in the FTSE 100 Index, climbing to the highest price in almost two years, after the lender said it will cut jobs to lower costs. Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc each added at least 3 percent. BHP Billiton, the world’s biggest mining company, lost 1.2 percent as workers at its Colombian mine threatened to strike.
The FTSE 100 rose 33.56 points, or 0.5 percent, to 6,310.62 at 1:27 p.m. in London. The equity benchmark dropped 1.3 percent last week amid political uncertainty in Italy and Spain. The gauge has still gained 7 percent so far this year. The broader FTSE All-Share Index also added 0.5 percent today, while Ireland’s ISEQ Index advanced 0.7 percent.
The reduction in Barclays jobs is “a larger figure than was discussed in the press,” Otto Dichtl, managing director of Knight Capital Europe Ltd., said in an interview with Mark Barton and Caroline Hyde on Bloomberg Television. “The main focus is on the strategic review. Overall, the announcements are not completely out of line with expectations, and in some cases, delivering a bit more. You can still find an argument for why banks should do well over time.”
The volume of shares changing hands on FTSE 100-listed companies was 36 percent higher than the average of the last 30 days, according to data compiled by Bloomberg. The volume of shares traded in Barclays was thrice the average of the last five days, the data show.
In the U.S., President Barack Obama delivers his State of the Union address at 9 p.m. in Washington. He will offer proposals for spending on infrastructure, clean energy and education, according to an administration official briefed on the speech.
Barclays jumped 7.1 percent to 322.75 pence, the highest price since Feb. 23, 2011, after saying it will eliminate 3,700 jobs to cut annual costs by 1.7 billion pounds ($2.6 billion). Chief Executive Officer Antony Jenkins said Barclays will target a return on equity above its 11.5 percent cost of equity, after the lender posted its first full-year loss in two decades.
A gauge of banking shares in the FTSE 350 Index climbed 2.4 percent. Lloyds advanced 3.8 percent to 54.8 pence and RBS gained 3 percent to 350.6 pence.
BHP Billiton slid 26 pence to 2,133.5 pence after workers at its Colombian Cerro Matoso mine, the world’s second-largest nickel producer, threatened to strike if the company disciplines a laborer.
BHP will hold a disciplinary hearing Feb. 14 to decide whether to sanction mine worker Jamer Ledesma for an alleged breach of a safety procedure, Sintracerromatoso union leader Domingo Hernandez said late yesterday. The union will decide by Feb. 21 whether to halt work, depending on the outcome, Hernandez said.
BAE Systems Plc dropped 1.8 percent to 330.45 pence after JPMorgan Chase & Co.’s Cazenove unit started coverage of the shares with a neutral rating, saying Europe’s biggest weapons maker faces structural problems and that its shares will perform worse than the industry average over the next 12 to 24 months.
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