U.K. Stocks Rally to 18-Month High on U.S. Jobs Data

U.K. stocks advanced to the highest level in almost 18 months as data on U.S. employment beat estimates, overshadowing concern that a New Year budget deal will fail to cut the American government’s deficit.

Next Plc advanced to the highest in at least 24 years after raising its profit forecast for the fiscal year ending this month. BP Plc jumped 2.4 percent amid reports Transocean Ltd. will settle claims related to the Deepwater Horizon explosion and subsequent oil spill. Rio Tinto Group slid.

The FTSE 100 gained 19.97 points, or 0.3 percent, to 6,047.34 in London, the highest since July 7, 2011. The gauge yesterday crossed the 6,000 mark as U.S. lawmakers passed a bill that prevented most scheduled tax increases from coming into effect, allaying concerns the world’s largest economy will slip back into recession. The broader FTSE All-Share Index rose 0.3 percent and Ireland’s ISEQ Index added 0.6 percent.

U.S. Companies added 215,000 workers in December, according to a private report based on payrolls today. The increase was higher than projected, data from the Roseland, New Jersey-based ADP Research Institute showed.

Separately, the U.S. Labor Department said first-time claims for jobless benefits rose by 10,000 to 372,000 in the week ended Dec. 29. The median estimate of economists surveyed by Bloomberg News called for 360,000 claims.

Stocks were little changed during the first half of the day as Moody’s Investors Service said the U.S. budget package passed by Congress won’t reduce the deficit enough to avoid a sovereign-rating downgrade.

Debt Ceiling

Republicans are planning to use the need to raise America’s $16.4 trillion debt ceiling to force President Barack Obama to accept spending cuts to entitlement programs such as Medicare. Congress must act as early as mid-February to prevent a default.

“The main focus has been just basically hanging on to the gains that we saw yesterday,” said Michael Hewson, a market analyst at CMC Markets Plc in London. “It is very early to start making any sort of significant decisions on the year.”

Next climbed 2.7 percent to 3,873 pence, its highest price since at least 1988. The U.K.’s second-largest clothing retailer reported Christmas sales that beat analyst expectations.

The company said full-year pretax profit will be between 611 million pounds ($992 million) and 625 million pounds, compared an earlier prediction of 590 million pounds to 620 million pounds.

Marks & Spencer Group Plc, the U.K.’s largest clothing retailer, added 1.5 percent to 388.4 pence. Debenhams Plc, the U.K.’s second-largest department-store chain, advanced 1.8 percent to 117.2 pence.

BP rose 2.4 percent to 441.7 pence. Transocean will settle all U.S. federal claims over the 2010 Deepwater Horizon oil rig explosion and spill in the Gulf of Mexico for between $1.4 billion and $1.5 billion, according to two people familiar with the matter.

Imagination Technologies Group Plc, the maker of chip technology for tablet computers and smart phones, surged 7.8 percent to 439.7 pence, its biggest gain since Oct. 16.

Entertainment One Ltd. gained 6.4 percent to 182.5 pence after it received approval from Canadian competition regulator to complete its acquisition of Alliance Films Inc.

CRH Plc declined 1.3 percent to 1,266 pence, for the largest decline in the FTSE 100. The world’s second-largest maker of construction materials said it spent 630 million euros ($826 million) in 2012 on acquisitions and development initiatives.

A gauge of London-listed mining shares fell 0.2 percent. Rio Tinto, the world’s second-largest mining company, lost 0.9 percent to 3,658.5 pence.

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