U.K. Stocks Gain for Third Day; Barclays ClimbsNamitha Jagadeesh
U.K. stocks advanced for a third day as Barclays Plc led a rally in banking shares after saying it will cut jobs to lower costs.
Barclays contributed the most to gains in the FTSE 100 Index, climbing to the highest price in almost two years. Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc each added at least 3 percent. BAE Systems Plc dropped to a two-month low after JPMorgan Chase & Co. initiated coverage on the shares with a neutral rating.
The FTSE 100 rose 61.32 points, or 1 percent, to 6,338.38 at the close in London. The equity benchmark dropped 1.3 percent last week amid political uncertainty in Italy and Spain. The gauge has still gained 7.5 percent so far this year. The broader FTSE All-Share Index also added 0.9 percent today, while Ireland’s ISEQ Index advanced 1.1 percent.
The reduction in Barclays jobs is “a larger figure than was discussed in the press,” Otto Dichtl, managing director of Knight Capital Europe Ltd., said in an interview with Mark Barton and Caroline Hyde on Bloomberg Television. “The main focus is on the strategic review. Overall, the announcements are not completely out of line with expectations, and in some cases, delivering a bit more. You can still find an argument for why banks should do well over time.”
The volume of shares changing hands on FTSE 100-listed companies was 26 percent higher than the average of the last 30 days, according to data compiled by Bloomberg. The volume of shares traded in Barclays was 4 1/2 times the average of the last five days, the data showed.
In the U.S., President Barack Obama delivers his State of the Union address at 9 p.m. in Washington. He will offer proposals for spending on infrastructure, clean energy and education, according to an administration official briefed on the speech.
Bridgewater Associates LP, the world’s biggest hedge fund, is bullish on stocks, oil, commodities and some currencies as it expects cash to shift to riskier assets.
“You want to be borrowing cash and hold almost anything against it,” Bob Prince, co-chief investment officer of the $140 billion fund, said on a client conference call Jan. 23, according to a transcript obtained by Bloomberg News. “We are at a possible inflection point right now with respect to the pricing of economic conditions in markets and then the actual conditions that are likely to occur.”
Barclays jumped 8.6 percent to 327.35 pence, the highest price since Feb. 18, 2011, after saying it will eliminate 3,700 jobs to cut annual costs by 1.7 billion pounds ($2.6 billion). Chief Executive Officer Antony Jenkins said Barclays will target a return on equity above its 11.5 percent cost of equity, after the lender posted its first full-year loss in two decades.
A gauge of banking shares in the FTSE 350 Index climbed 3 percent. Lloyds advanced 5.1 percent to 55.45 pence and RBS gained 4.1 percent to 354.2 pence.
London Capital Group Holdings Plc surged 21 percent to 48.5 pence, the most since the company sold shares to the public in 2005. The U.K. provider of spread-betting products said it has has received preliminary approaches from Cantor Fitzgerald Europe, Gain Capital Holdings Inc. and City Index Ltd. on a possible acquisition. The companies have until 5 p.m. on March 12 to make a bid, according to the statement.
BAE dropped 1.8 percent to 330.4 pence after JPMorgan’s Cazenove unit said Europe’s biggest weapons maker faces structural problems and that its shares will perform worse than the industry average over the next 12 to 24 months.