U.K. Stocks Rise; Vodafone Jumps on Verizon Wireless Talk
U.K. stocks rose, snapping two days of losses, as data showed the U.S. economy grew more in the second quarter than forecast, and Vodafone Group Plc (VOD) said it is in talks to sell its stake in a joint venture to partner Verizon Communications Inc. (VZ)
Vodafone soared to its highest price since 2002. WPP (WPP) Plc rallied 4.2 percent after first-half revenue beat analysts’ estimates. Melrose Industries Plc (MRO) rose 6.1 percent after first-half sales more than doubled from a year earlier. Serco Group Plc (SRP) slid the most in 11 years as the U.K. government said it found evidence of potential fraud by the services company’s staff members in managing a prisoner-escort contract.
The FTSE 100 Index (UKX) climbed 52.99 points, or 0.8 percent, to 6,483.05 at the close in London. The gauge has advanced 7.5 percent from a low on June 24 and is trading at 12.6 times estimated earnings, compared with a 2009 high of 15 times, according to data compiled by Bloomberg. The broader FTSE All-Share Index also gained 0.8 percent today, while Ireland’s ISEQ Index added 2 percent.
“We’re seeing a good share-price development for Vodafone today, after the news about Verizon,” said Peter Braendle, a Zurich-based portfolio manager who helps oversee about $60 million, including Vodafone shares, at Swisscanto Asset Management. “If the price is attractive, the stake sale is very much a good thing. I’m also positive about U.K. stocks because the U.K. economy seems to find its way out of sluggish growth and valuations are not yet demanding.”
In the U.S., revised Commerce Department data showed the world’s biggest economy expanded at a 2.5 percent annualized pace in the second quarter, compared with the 2.2 percent-pace predicted by economists in a Bloomberg survey. The initial reading was for a 1.7 percent rate.
A separate report showed applications for jobless benefits fell by 6,000 to 331,000 last week, from a revised 337,000 the week before that was higher than initially reported. Economists in a separate survey had forecast a drop to 332,000.
The volume of shares traded in FTSE 100-listed companies was 43 percent higher than the 30-day average, according to data compiled by Bloomberg.
Vodafone jumped 8.2 percent to 204.75 pence. The world’s second-biggest wireless operator said it is in talks with Verizon to sell its 45 percent stake in Verizon Wireless. The deal may be valued at $130 billion, said two people familiar with the matter. That would make it the biggest transaction since Vodafone’s acquisition of Mannesmann AG in 2000.
WPP rallied 4.2 percent to 1,227 pence after saying first-half revenue rose to 5.33 billion pounds ($8.27 billion), exceeding the 5.29 billion-pound average estimated by analysts in a Bloomberg survey. Sales will increase more than 3 percent this year, the world’s largest advertising company said.
Melrose climbed 6.1 percent to 301.8 pence, its highest price since at least 2003, as it said first-half adjusted profit before tax rose to 139.4 million pounds from 65.9 million pounds a year earlier, after its purchase of Elster Group SE. The investment company focused on engineering firms agreed to buy Elster for $2.3 billion in June 2012.
“With the excellent progress achieved at Elster and substantial shareholder value being created from disposals, 2013 is looking like it could be a very successful year,” Melrose Chairman Christopher Miller said in a statement.
Serco slid 11 percent to 538.5 pence. The services company and the U.K.’s Ministry of Justice asked the City of London police to investigate discrepancies in Serco’s records of performance related to a contract that included transporting prisoners. Serco said its board members had no knowledge of misreporting. Separately, it posted first-half pretax profit that missed analyst forecasts.
“Unless it undertakes a rapid process of major change, and becomes completely open with government about the work it is doing for us, then it will not win public contracts in future,” Secretary of State for Justice Chris Grayling said of Serco.
Petropavlovsk Plc (POG) plunged 19 percent to 102.25 pence as the producer of gold in Russia reported a first-half net loss of $742.2 million, compared with a profit of $11 million a year earlier, saying lower gold prices led to writedowns.
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