U.K.’s FTSE 100 Advances After U.S. Employment Report

U.K. stocks rallied, trimming the FTSE 100 Index’s biggest weekly drop this year, as U.S. payrolls topped forecasts and a gain in the unemployment rate boosted speculation the Federal Reserve will maintain stimulus measures.

Bellway Plc added 1.4 percent after the homebuilder said reservations in the past four months rose 31 percent as buyers had greater access to mortgages. Elan Corp. jumped to a 10-month high in Dublin after Royalty Pharma increased its offer for the Irish drugmaker to as much as $6.7 billion. BT Group increased 3.7 percent as Barclays Plc recommended investors buy shares of the U.K.’s largest fixed-line company.

The FTSE 100 climbed 75.88 points, or 1.2 percent, to 6,411.99 at the close in London. The index has still fallen 2.6 percent this week, the biggest drop since November, amid speculation the Fed will tighten monetary policy by trimming bond purchases as the U.S. economy strengthens. The FTSE All-Share Index also advanced 1.2 percent today, while Ireland’s ISEQ Index rallied 1.4 percent.

“The market obviously thought that U.S. unemployment would ease a bit,” said Carsten Hilck, who oversees about $6.5 billion at Union Investment Privatfonds GmbH in Frankfurt. “As this hasn’t happened there will be no ending of quantitative easing. This has been driving the market so we’d better stay above the 6.5 percent unemployment level.”

The U.S. unemployment rate climbed to 7.6 percent last month from 7.5 percent in April, according to a Labor Department report. Still, companies boosted payrolls by 175,000 workers after they increased by a revised 149,000 in April. Economists surveyed by Bloomberg had estimated a gain of 163,000.

Fed Purchases

Fed Chairman Ben S. Bernanke in May signaled the central bank could curtail its bond buying if the job market improves in a “real and sustainable way.”

Bellway advanced 1.4 percent to 1,334 pence. The U.K. government’s Help to Buy initiative, which enables buyers to pay a deposit as low as 5 percent of the property’s value, helped the company have 160 reservations a week in the four months through May 31, according to a statement today.

Elan jumped 5.3 percent to 9.97 euros in Dublin, its highest price since July 23, 2012. Royalty Pharma raised its takeover offer for the drugmaker to $13 per American depositary receipt plus a contingent value right of as much as $2.50. The offer was previously for $12.50 per ADR.

BT Group climbed 3.7 percent to 312.8 pence. Barclays increased its rating on the stock to overweight, similar to a buy recommendation, from equal weight. The phone company’s free cash flow may increase as the take-up of BT’s fiber network accelerates, according to analysts led by Maurice Patrick.

Severn Trent

Severn Trent Plc advanced 2.5 percent to 2,070 pence, snapping four days of losses. Borealis Infrastructure Management Inc. and its partners boosted their offer to acquire the water utility to 5.3 billion pounds ($8.2 billion).

Partnership Assurance Group Plc, a U.K. annuity provider owned by Cinven Partners LLP, surged 17 percent to 450 pence on its first day of trading in London. The company priced its initial public offering at 385 pence a share.

A gauge of London-listed mining companies rose 1.4 percent, trimming its fourth consecutive weekly decline.

Glencore Xstrata Plc increased 1.3 percent to 315.05 pence as Credit Suisse Group AG added the commodity producer and trader to its “Focus List,” citing possible divestments and further cost cuts in the second half of the year.

Aberdeen Asset Management Plc dropped 1.7 percent to 415.7 pence, the lowest price in six weeks. Bank of America Corp.’s Merrill Lynch unit cut its rating on Scotland’s largest money manager to underperform, similar to a sell recommendation, from neutral, saying the stock’s price is unjustified given slowing earnings growth.

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