U.K. Stocks Rise as Putin Says Russia Won’t Split Ukraine
U.K. stocks advanced for a second day as President Vladimir Putin said Russia isn’t seeking to partition Ukraine, allaying investor concern that his country would invade other regions after Crimea voted to secede.
BAE Systems Plc climbed the most since December after RBC Capital Markets upgraded the shares. ITE Group Plc, which earns most of its revenue from Russia, added 2.3 percent. Asos (ASC) Plc slid 8.3 percent as the U.K.’s biggest online-only fashion retailer forecast lower profit margins after raising its capital expenditure target more than initially predicted.
The FTSE 100 Index (UKX) gained 36.93 points, or 0.6 percent, to 6,605.28 at the close of trading in London. The benchmark gauge has fallen 3 percent this month amid a standoff between Russia and the West over Crimea and worse-than-forecast Chinese economic data. The FTSE All-Share Index advanced 0.5 percent today, while Ireland’s ISEQ Index added 0.3 percent.
“Putin’s speech gives some color on his intentions about Crimea and Ukraine,” said Pierre Mouton, who helps oversee $6 billion at Notz, Stucki & Cie in Geneva. “Any clarification helps markets concentrate on fundamentals instead of geopolitics.”
Putin told lawmakers in Moscow that he wants friendship with a sovereign Ukraine, signalling that Russia isn’t about to invade eastern parts of the former Soviet republic. He also called Crimea an “inalienable” part of Russia. In a March 16 referendum, 97 percent of voters said the Black Sea peninsula should secede from Ukraine.
“Don’t believe those who scare you with Russia, who yell that Crimea will be followed by other regions,” Putin said. “We don’t want to split up Ukraine, we don’t need that.”
In the U.S., Federal Reserve officials begin a two-day meeting at which they will decide whether to pare the central bank’s monthly asset-purchase program. Policy makers will announce the outcome following the close of European markets tomorrow. The Fed will trim the stimulus by $10 billion to $55 billion and continue reducing it by that amount at every meeting before ending the program at the Oct. 28-29 meeting, according to the median response in a Bloomberg survey.
BAE climbed 2.9 percent to 407.8 pence after RBC raised its recommendation on Europe’s largest defense company to outperform, similar to buy, from sector perform. The brokerage said the shares trade at a discount to their U.S. peers and cited potential increases in export sales for the upgrade.
BAE trades at about 9.9 estimated annual earnings, compared with 13.7 times for Northrop Grumman Corp. and 15.5 for Lockheed Martin Corp., according to data compiled by Bloomberg.
ITE (ITE), the organizer of exhibitions and conferences that earned 63 percent of its revenue from Russia last year, climbed 2.3 percent to 224.9 pence. The shares have tumbled 27 percent so far this year.
Barclays Plc (BARC), the U.K.’s second-largest lender by assets, rose 2.2 percent to 236.1 pence. A gauge of banking stocks posted the biggest gain of the 19 industry groups on the Stoxx Europe 600 Index.
Asos tumbled 8.3 percent to 5,800 pence as it increased its capital-expenditure target for this year to at least 68 million pounds ($113 million), more than its previous guidance of 55 million pounds. Along with investment in a Chinese startup, this will cut its margin on earnings before interest and taxes to about 6.5 percent, the company said.
Fresnillo Plc (FRES), a silver producer, slid 4.8 percent to 880.5 pence and Randgold Resources Ltd. dropped 1.7 percent to 4,884 pence as gold and silver prices fell.
Speedy Hire Plc plunged 16 percent to 64.3 pence after saying it is selling assets at a slower pace than predicted. The construction-equipment provider also forecast wider trading losses from its Middle East business and lower margins on U.K. hiring than it had previously estimated.
Liberum Capital Ltd. downgraded its recommendation on the company to hold from buy, and cut its estimate for 2014 profit before taxes by 21 percent.
The volume of shares changing hands in FTSE 100-listed companies was 11 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.
To contact the editors responsible for this story: Cecile Vannucci at email@example.com Alan Soughley, Will Hadfield