U.K. Stocks Advance as Aviva Jumps on Profit GrowthNamitha Jagadeesh
U.K. stocks advanced as Aviva Plc rallied on better-than-forecast profit, outweighing a decline in IMI Plc whose forecast disappointed investors.
Aviva jumped to its highest price since September 2008 after posting a 6 percent increase in 2013 operating profit. IMI declined to an eight-month low after forecasting a lower profit margin and modest revenue growth in the first half of the year. Aggreko Plc rallied the most this year after saying it will return about 200 million pounds ($334 million) to shareholders in addition to paying a dividend.
The FTSE 100 Index gained 13.07 points, or 0.2 percent, to 6,788.49 at the close in London. The measure jumped the most in eight months on March 4 as Russian President Vladimir Putin eased investor concern about a standoff in Ukraine by saying he saw no immediate need to invade the country. The broader FTSE All-Share Index added 0.2 percent today, while Ireland’s ISEQ Index jumped 0.7 percent.
“The earnings season so far has been a mixed bag,” said Espen Furnes, who helps oversee about $75 billion at Storebrand Asset Management in Oslo. “The Aviva numbers look good. This bodes well for margins going forward.”
European Central Bank President Mario Draghi said he expects interest rates in the region to stay at their current level or lower for an extended period. The ECB held its key rate at 0.25 percent, matching the median estimate of 54 economists surveyed by Bloomberg. Fourteen of the respondents had predicted the central bank would lower the rate. The ECB also left its deposit facility rate and the marginal lending rate unchanged.
The central bank raised its forecast for euro-area economic growth in 2014 to 1.2 percent from 1.1 percent in December. Draghi said he expects a slow pace of economic recovery.
The Bank of England today held its benchmark interest rate at 0.5 percent, as predicted by all 52 economists in a Bloomberg News survey. The central bank also maintained its limit for asset purchases at 375 billion pounds.
U.K. house prices rose in February at the fastest pace since May 2009, a report showed. Values increased 2.4 percent to an average of 179,872 pounds, according to Halifax, a unit of Lloyds Banking Group Plc. Prices climbed 10 percent from a year earlier.
Aviva jumped 8.1 percent to 504 pence, its biggest gain since October 2011. The insurer said full-year operating income rose to 2.05 billion pounds, exceeding the 1.99 billion-pound estimate of analysts provided by the company. The U.K. insurer said cost-cutting expenses fell 21 percent and its internal loan dropped by 1.7 billion pounds to 4.1 billion pounds.
IMI slid 4.3 percent to 1,481 pence after forecasting that revenue excluding acquisitions and currency swings would grow modestly in the first half.
“The company has showed a strong earnings growth over a long period and this is the first sign of weakness we’ve seen in a long time,” said Storebrand’s Furnes. “The company blames FX movements for the margin weakness. Unfortunately, this will probably not be a temporary issue, but a more permanent one.”
Aggreko gained 3.5 percent to 1,628 pence, the biggest gain since Dec. 16. The world’s largest supplier of mobile power generators proposed to return about 75 pence for each share held on May 27, in addition to paying the 2013 dividend of 26.3 pence a share.
Schroders Plc climbed 5.3 percent to 2,727 pence after raising its dividend by 40 percent to 42 pence. The U.K.’s biggest publicly traded money manager also said 2013 pretax profit before one-time items jumped 41 percent to 507.8 million pounds.
A gauge of mining companies in the FTSE 350 Index rose 1.5 percent. Anglo American Plc advanced 3 percent to 1,565 pence and Glencore Xstrata Plc added 2.3 percent to 339.95 pence.