U.K. Stocks Jump Amid Signs of Compromise on U.S. Debt
U.K. stocks surged the most in three months amid signs that U.S. lawmakers may agree on a compromise deal to avoid a sovereign-debt default.
Hays Plc (HAS) climbed 2.2 percent after the recruitment company said quarterly fees increased in its European markets. WH Smith Plc (SMWH) jumped the most in six months after raising its final dividend and saying it plans to repurchase an additional 50 million pounds ($80 million) of shares. Melrose Industries Plc (MRO) added 1.8 percent after KKR & Co. said it will pay about $1 billion for two of its U.S. industrial-products companies.
The FTSE 100 Index advanced 92.58 points, or 1.5 percent, to 6,430.49 at the close of trading in London, halting a three-day losing streak after falling to a three-week low yesterday. The equity benchmark has lost 2.9 percent from a high on Sept. 19 as a standoff between U.S. lawmakers led to the first partial government shutdown in 17 years. The broader FTSE All-Share Index also added 1.5 percent today, as did Ireland’s ISEQ Index.
“If they do not agree, and the U.S. has automatic spending cuts, that will lead to a German-style austerity and the U.S. will go straight into recession,” Alain Bokobza, head of strategy at Societe Generale SA told Francine Lacqua on Bloomberg Television. “The probability of this happening is very small.”
The volume of shares changing hands in FTSE 100-listed companies today was 10 percent lower than the daily average in the past 30 days, according to data compiled by Bloomberg.
House Republican leaders are presenting their members with a proposal to raise the $16.7 trillion U.S. debt limit for six weeks without policy conditions, said a congressional aide familiar with the details. The world’s biggest economy will exhaust its borrowing authority by Oct. 17 without a deal, according to the Treasury Department.
The Republican proposal wouldn’t end the partial government shutdown, said the aide, who asked for anonymity to discuss strategy. Obama will meet House Republican leaders at 4:35 p.m. in Washington.
The Bank of England held its key interest rate at 0.5 percent and kept its asset-purchase program unchanged today, matching predictions in two separate Bloomberg News surveys. Governor Mark Carney has said the central bank won’t consider raising its benchmark rate at least until unemployment falls to 7 percent, which it forecasts may not happen until late 2016.
Hays climbed 2.2 percent to 118.1 pence. Comparable fees rose 8 percent in the U.K. and Ireland region for the three months ended Sept. 30, the company said today. Fees rose 7 percent in Germany from last year, contributing to a 2 percent increase for the group in the period.
WH Smith rallied 5.6 percent to 882 pence, its biggest increase since April 11 and the highest price since the chain-store split its units in 2006. The retailer proposed a final dividend of 21.3 pence per share, up from last year’s 18.6 pence a share.
Melrose rose 1.8 percent to 295.2 pence after KKR, a New-York based private-equity firm, said it will buy Crosby Group and Acco Material Handling Solutions from the U.K. company. Melrose, based in London, bought the manufacturing companies in 2008 with the intention of improving their performance and selling them.
Whitbread Plc (WTB) added 4.1 percent to 3,114 pence, its largest advance since September 2012. Oriel Securities Ltd. raised its rating on the shares to buy from hold, citing improvement in the U.K. hotel market.
Talvivaara Mining Co. Plc slumped 20 percent to 6.86 pence, extending losses so far this year to 75 percent. The Finnish commodity producer said it is assessing all options for additional funding to offset low prices and output.
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