U.K. Stocks Advance to Five-Year High on German DataSrinivasan Sivabalan and Sofia Horta e Costa
U.K. stocks rose, with the FTSE 100 Index advancing to its highest level since January 2008, as a report showed that German economic sentiment improved more than forecast in February.
Standard Chartered Plc jumped to the highest price since December 2010 as Morgan Stanley recommended investors buy the stock. Drax Group Plc surged to a four-year high. Vodafone dropped 2 percent after Sanford C. Bernstein & Co. downgraded the shares. InterContinental Hotels Group Plc fell the most in almost four months after reporting earnings.
The FTSE 100 gained 1 percent to 6,379.07 at the close in London. The benchmark gauge has rallied 8.2 percent so far this year as U.S. lawmakers reached a budget compromise. The measure is also heading for its ninth monthly increase, its longest winning streak since 1997. The broader FTSE All-Share Index also rose 1 percent today. Ireland’s ISEQ Index advanced 0.6 percent.
The German data “confirms again that the outlook for Europe is slowly but surely improving,” Adrian van Tiggelen, The Hague-based chief equity strategist at ING Investment Management, which oversees 183 billion euros ($244 billion), told Guy Johnson on Bloomberg TV. “Germany is picking up, the rest of Europe is still weakish, but equity investors see sufficient positive news worldwide to remain positive.”
German investor confidence jumped more than economists forecast in February to the highest since April 2010, data showed. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, climbed to 48.2 this month from 31.5 in January. Economists in a Bloomberg survey had forecast a gain to 35.
Standard Chartered gained 2.4 percent to 1,771 pence. Morgan Stanley upgraded its rating on the stock to overweight, similar to a buy recommendation, from equal weight. Analysts led by Anil Agarwal cited an improving outlook for its Asian business. A gauge of London-listed lenders added 0.5 percent.
Drax Group, which operates the U.K.’s largest coal-fired power station, jumped 6.1 percent to 641.5 pence, its highest price since November 2008. Drax said it is speeding up the plant’s conversion to fire biomass and will switch on the first unit in April, rather than June as previously planned.
Vodafone Group Plc slid 3.3 pence to 163.5 pence after Bernstein cut its rating for the world’s second-largest wireless carrier to underperform from market perform, signaling investors should sell the shares. Vodafone’s European assets, which account for about 40 percent of the group operating profit, may shrink by 23 percent in the next three years, Bernstein said.
“As neither the lowest-cost provider nor a differentiated operator, Vodafone seems destined to decline with the wireless-only segment,” analysts including John Keith said in a note.
InterContinental Hotels lost 1.8 percent to 1,953 pence after Investec Plc cut its recommendation for the stock to hold from buy. The world’s largest provider of hotel rooms said its 2012 operating profit excluding exceptional items rose 10 percent. The shares have still gained 14 percent this year.
“There’s a degree of indigestion after a very strong run in the share price,” James Bevan, chief investment officer at CCLA Investment Management Ltd., which holds shares of InterContinental Hotels, told Francine Lacqua on Bloomberg TV. “The market is saying the valuation is now rich, maybe we should take some chips off the table.”