U.K. Stocks Climb to 23-Month High After U.S. Jobs Data

U.K. stocks advanced to the highest level in 23 months after a report showed U.S. employers hired more workers in December than economists estimated and the jobless rate in the world’s largest economy remained unchanged.

BP Plc climbed 2.7 percent as Exane BNP Paribas said Transocean Ltd.’s settlement of claims over the 2010 Gulf of Mexico oil spill case was a positive development for the British company. Fresnillo Plc declined 4 percent after UBS AG downgraded the shares and silver slid to the lowest in four months. Marks & Spencer Group Plc lost 3.1 percent after Nomura Holdings Inc. lowered its estimate for fiscal-year profit.

The FTSE 100 Index rose 42.5 points, or 0.7 percent, to 6,089.84 in London, the highest since Feb. 8, 2011. The gauge rallied 2.8 percent this week as U.S. lawmakers agreed on a budget deal. The broader FTSE All-Share Index added 0.7 percent and Ireland’s ISEQ Index gained 0.6 percent today, both jumping to the highest in more than four years.

“The U.S. jobs report is good news for the markets as the payrolls numbers were certainly better than expected,” said Gerard Lane, a strategist at Shore Capital Group Ltd. in Liverpool, England. “Overall, it suggests that the U.S. economy is improving.”

American payrolls rose by 155,000 workers in December, following a revised 161,000 gain a month earlier, the Labor Department said in a report today. The median forecast of economists in a Bloomberg survey projected an increase of 152,000. The unemployment rate held at 7.8 percent.

Policy Debate

Minutes released yesterday from the Federal Open Market Committee’s Dec. 11-12 meeting revealed a debate between policy makers on how long the bond buying should continue. Participants were “approximately evenly divided” between those who said it would be appropriate to end the purchases around mid-2013 and those who said the program should continue beyond that date.

In the U.K., analyst estimates on earnings look “too optimistic,” UBS AG strategists led by Matthew Gilman said. U.K. companies will see a growth in earnings per share of 3 percent in 2013 and 7 percent in 2014, compared with average estimates of 8 percent and 10 percent respectively, they wrote in a note.

BP, whose Macondo well exploded in 2010 to set off the largest offshore oil spill in U.S. history, advanced 2.7 percent to 453.5 pence. Transocean’s settlement of federal claims related to the spill, announced in a court filing yesterday, could bring BP closer to one of its own before a civil trial in late February, Exane analysts led by Alejandro Demichelis wrote in a note.

Balfour Beatty

Balfour Beatty Plc added 2.2 percent to 288.2 pence after getting a five-year highway maintenance contract for 150 million pounds ($241 million) from the U.K.’s Wiltshire Council.

Punch Taverns Plc, the owner of more than 4,500 U.K. pubs, climbed 11 percent to 11 pence, the highest price in nine months, after Cerberus Capital Management LP bought peer Admiral Taverns Ltd. from Lloyds Banking Group Ltd. The transaction was valued at about 200 million pounds, according to three people familiar with the matter.

Fresnillo slid 4 percent to 1,810 pence, the most since June 22, as UBS AG cut its recommendation on the world’s biggest primary silver producer to neutral from buy. The spot price of the metal declined to the lowest level since Aug. 22.

A gauge of mining shares in the FTSE 350 Index dropped 0.8 percent as metal prices slid in London. BHP Billiton Ltd., the world’s largest mining company, slipped 0.8 percent to 2,182.5 pence. Rio Tinto Group, the second-largest, fell 1.2 percent to 3,613 pence.

Marks & Spencer lost 3.1 percent, the most since Nov. 7, to 376.4 pence after Nomura cut its estimate for the U.K. retailer’s profit before taxes to 666 million pounds ($1.07 billion) from 694 million pounds. Same-store sales probably dropped 1.4 percent in the third quarter, Nomura analyst Fraser Ramzan wrote in a report.

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