U.K. Stocks Climb to Five-Year High as Lloyds Advances
U.K. stocks climbed to a five-year high, extending the benchmark FTSE 100 (UKX) Index’s fourth straight weekly advance, as banks and mining companies rallied and U.S. consumer confidence topped forecasts.
Lloyds Banking Group Plc rose 3.2 percent, climbing above the level the government expects to break even on its holdings in the lender. Anglo American (AAL) Plc and Lonmin Plc (LMI) gained after operations in South Africa returned to normal following strikes. Intertek Group Plc (ITRK) lost 1.9 percent after forecasting its minerals business will hurt profitability.
The FTSE 100 added 35.26 points, or 0.5 percent, to 6,723.06 at the close in London, the highest since October 2007. The gauge has climbed 1.5 percent this week and has surged 14 percent this year, boosted by central-bank stimulus.
“Equities are still very attractive, but you have to be mindful that they have gone a long way without a meaningful correction,” said Lars Kreckel, an equity strategist at Legal & General Investment Management in London, which oversees $617 billion. “If you look at sentiment and positioning, some of the usual warning signs are not really there.”
The broader FTSE All-Share Index rose 0.6 percent today for a 12th straight advance, its longest winning streak since 1987. Ireland’s ISEQ Index increased 0.2 percent.
Consumer confidence in the U.S. advanced to the highest level in almost six years in May. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment climbed to 83.7 in May, the highest since July 2007, from 76.4 the prior month, a report today showed. The median forecast in a Bloomberg survey was for a gain to 77.9.
Gains were limited in Europe today after Federal Reserve Bank of San Francisco President John Williams said quickening economic growth and an improving job market may prompt the U.S. central bank to reduce its $85 billion of monthly bond purchases in the next few months. Williams, who doesn’t vote on policy this year, spoke in Portland, Oregon, late yesterday.
The volume of shares changing hands in FTSE 100 companies was 24 percent higher than the average of the past 30 days, data compiled by Bloomberg show.
Lloyds rose 3.2 percent to 62.84 pence, climbing above the 61 pence price the U.K. government set to break even on its holdings after bailing out the bank out in 2008.
The government had reduced the price below which it would recognize a loss from selling its stakes in Lloyds (LLOY) and Royal Bank of Scotland Group Plc (RBS) to take into account fees the lenders paid the Treasury, officials with knowledge of the matter said in March.
The government originally paid about 73.6 pence for its Lloyds shares when it provided a 20 billion-pound ($31 billion) bailout in 2008. Shares of RBS gained 5.7 percent to 336.8 pence, the highest since February.
Anglo American rose 1.4 percent to 1,570 pence and Lonmin gained 1.3 percent to 274.1 pence.
Anglo American’s platinum unit, the biggest producer of the metal, said its mines are running normally after a group of workers threatened to strike over job cuts. Lonmin also said workers had returned to work following a two-day strike.
Ocado Group Plc (OCDO) soared 36 percent to 274.1 pence, the biggest jump since it sold shares in 2010, after unveiling a partnership with William Morrison Supermarkets Plc that will boost the online grocer’s coffers by 170 million pounds.
The 25-year agreement paves the way for Morrison to make a belated entry to the U.K. online grocery market. The supermarket chain will acquire the lease of Ocado’s new distribution center in central England as part of a total investment of 216 million pounds, it said today. Morrison rose 1.4 percent to 286.5 pence.
Intertek fell 1.9 percent to 3,385 pence after the consumer-goods testing company said declines in its minerals business this year have trimmed its earnings margin and will continue to be a drag on profitability this year.
Associated British Foods Plc (ABF), the owner of Twinings tea and Ovaltine malt drink, slid 2 percent to 1,886 pence as strategists at Credit Suisse Group AG and Goldman Sachs Group Inc. downgraded food companies to underweight, the equivalent of a sell recommendation. Tate & Lyle Group Plc, the maker of low-calorie sweetener Splenda, slid 1.3 percent to 850 pence.
Eurasian Natural Resources Corp. dropped 8 percent to 371.6 pence for the biggest decline in nine months. The mining company’s three founding shareholders sent a letter to its independent committee of directors with details of a planned bid for the firm at a price of less than 300 pence a share, according to people familiar with the matter.
The founders, who said April 19 they formed a group with the Kazakh government to consider a takeover, will probably seek an extension of the deadline for a formal proposal, the people said, asking not to be identified.
To contact the reporter on this story: Sarah Jones in London at firstname.lastname@example.org
To contact the editor responsible for this story: Andrew Rummer at email@example.com