U.K. Stocks Climb as U.S. House Prices AdvanceSofia Horta e Costa
U.K. stocks climbed for a fifth day, with the benchmark FTSE 100 Index closing above the 6,300 level for the first time in 4 1/2 years, as a report showed that house prices in the U.S. rose at the fastest pace since August 2006.
Anglo American Plc advanced 3 percent after JPMorgan Chase & Co. said the company’s $4-billion writedown for its Brazilian iron-ore unit was at the lower end of its estimated range. Royal Bank of Scotland Group Plc dropped the most in seven months after a report that U.S. authorities want the lender to make a guilty plea to criminal charges over manipulating Libor.
The benchmark FTSE 100 added 44.78 points, or 0.7 percent, to 6,339.19 at the close in London. The equity benchmark has rallied 7.5 percent so far in 2013, its best start to a year since 1989, as U.S. lawmakers agreed on a compromise budget. The broader FTSE All-Share Index also climbed 0.7 percent today, while Ireland’s ISEQ Index advanced 0.4 percent.
“Even if you do see a bit of a dip in equity markets, you can buy now,” Daniel Morris, a global strategist at JPMorgan Asset Management in London, said in a Bloomberg Television interview with Guy Johnson and Francine Lacqua. “The market is somewhat inexpensive relative to history. We have a bigger variation particularly in Europe across countries, sectors and companies than we’ve had in the past, so there’s a real opportunity for stock picking now.”
The dividend yield on the benchmark Stoxx Europe 600 Index remains 1.96 percentage points greater than the yield on 10-year German bunds, according to data compiled by Bloomberg.
In the U.S., Britain’s biggest trading partner, house prices rose by the most in more than six years in November, a report showed. The S&P/Case-Shiller index of property values in 20 cities increased 5.5 percent from a year earlier, the biggest year-on-year gain since August 2006.
The Federal Open Market Committee will renew its commitment to asset buying during a two-day meeting that starts today, according to economists surveyed on Jan. 24-25. Federal Reserve Chairman Ben S. Bernanke has said that monetary easing will continue until the country’s unemployment rate shows “substantial” improvement.
In Germany, GfK SE, a Nuremberg-based market-research company, forecast that its consumer-sentiment index, based on a survey of about 2,000 people, will rise to 5.8 in February from a revised 5.7 in January. Economists had predicted the measure would climb to 5.7, according to the median of 34 estimates in a Bloomberg News survey.
Anglo American added 3 percent to 1,929.5 pence after announcing it will write down $4 billion on its Minas-Rio iron-ore project in Brazil. JPMorgan said that the company’s capital expenditure fell short of its estimates.
European mining companies posted the biggest gain on the Stoxx 600. Evraz Plc increased 2.8 percent to 301.9 pence and Rio Tinto Group advanced 2 percent to 3,575.5 pence.
William Hill Plc climbed 2.1 percent to 374 pence, its highest price in more than five years. The bookmaker with more than 2,000 outlets in the U.K. said that net revenue probably increased 12 percent last year and operating profit surged 20 percent. The company will release its final results on March 1.
Investec Plc added 3.1 percent to 474.4 pence after Morgan Stanley analyst Greg Saffy initiated coverage of the company with a buy recommendation. The owner of a bank and money manager in South Africa and the U.K. may be undervalued by 25 percent, Saffy wrote in a note.
3i Group Plc rose 3.1 percent to 266.8 pence, its highest price in 18 months. The U.K.’s oldest private-equity company said Edward Bramson’s Sherborne Investors began buying the stock in January. 3i added that Bramson may have sold some of the shares to Jefferies International Ltd.
RBS dropped 6 percent to 345.8 pence, its biggest decline since June. U.S authorities want a guilty plea to criminal charges from the lender as part of a 500 million-pound ($787 million) settlement of their investigation into interest-rate rigging, the Wall Street Journal reported, citing people familiar with the matter.
BT Group Plc slipped 2.3 percent to 246.2 pence, its largest drop in two months. Bank of America Corp.’s Merrill Lynch unit lowered its recommendation on the U.K. biggest fixed-line telecommunications operator to neutral from buy, saying that increased costs will endanger its earnings growth.
The volume of shares changing hands in companies listed on the FTSE 100 was 11 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.