U.K. Stocks Rise After Fed Decision; Prudential, WPP GainTrista Kelley
U.K. stocks rose for a second day after the Federal Reserve’s decision to taper asset purchases increased investor confidence in the U.S. economic recovery.
AstraZeneca Plc added 1.1 percent after saying it will buy Bristol-Myers Squibb Co.’s share of the companies’ joint venture that makes diabetes drugs. WPP Plc climbed 3.5 percent after agreeing to buy a majority stake in ClickMedia, a Vietnam-based social-media marketing agency with clients including Unilever NV and Estee Lauder Cos.
The FTSE 100 Index gained 92.62 points, or 1.4 percent, to 6,584.7, at the close of trading in London. The benchmark has risen 12 percent this year as central banks around the world pledged to leave interest rates low for a prolonged period of time. The broader FTSE All-Share Index also advanced 1.4 percent today, and Ireland’s ISEQ Index jumped 1.5 percent.
“This is a rational response to a modest removal of an extraordinary amount of stimulus,” said John Haynes, head of research at Investec Wealth & Investment in London. “The world’s getting more healthy, and it’s about time too.”
Fed Chairman Ben S. Bernanke cited an improved labor-market outlook for the Fed’s decision to trim bond buying by $10 billion to $75 billion a month. The purchases will be divided between $40 billion in Treasuries and $35 billion in mortgage bonds starting in January, Bernanke said after concluding a two-day policy meeting.
He also reiterated that the central bank will probably hold its target interest rate near zero “at least as long as” unemployment exceeds 6.5 percent and the outlook for inflation is no higher than 2.5 percent.
AstraZeneca rose 1.1 percent to 3,599 pence, its highest price since 2002. The drugmaker will pay $2.7 billion initially to take over the joint venture, then as much as $1.4 billion more, depending on regulatory, commercial and sales goals, and potentially another $225 million when some assets are subsequently transferred, it said in a statement.
WPP Plc climbed 3.5 percent to 1,344 pence as the world’s largest advertising company announced the purchase of a stake in ClickMedia. WPP didn’t give financial details of the deal.
Prudential Plc added 2.8 percent to 1,306 pence as a gauge of insurers posted one of the best performances of the 19 industry groups on the Stoxx Europe 600 Index. Standard Life Plc rose 3.6 percent to 352.7 pence, the most since Oct. 10.
Serco Group Plc jumped 6.2 percent to 476.6 pence, rebounding from earlier losses of as much as 3.3 percent, after the U.K.’s biggest government outsourcing provider said an audit of its contracts ended “satisfactorily.”
Serco also said its board believes proposals to resolve government investigations and improve its services are sufficient to restore government confidence, allowing it to bid for future state contracts. A final assessment will be concluded in January.
G4S, a Serco peer in providing government services, slipped 1.9 percent to 248.9 pence. The Ministry of Justice referred the company to the Serious Fraud Office after finding “serious issues” in an audit.