U.K. Stocks Advance for a Second Day as BP, Banks ClimbCorinne Gretler
U.K. stocks increased for a second day, with the benchmark FTSE 100 Index rising to its highest level in more than seven weeks, as preliminary data showed economic growth accelerated in the first quarter.
BP Plc added 2.9 percent after the U.K.’s second-largest oil producer raised its quarterly dividend. HSBC Holdings Plc led banks higher in line with its European peers. Serco Group Plc tumbled 15 percent after warning late yesterday of a possible downgrade to its forecasts.
The FTSE 100 rose 69.75 points, or 1 percent, to 6,769.91 at the close of trading in London. The gauge has still lost 1.4 percent since reaching a 14-year high on Feb. 24 amid tension between Russia and Ukraine. The FTSE All-Share Index added 0.9 percent today, while Ireland’s ISEQ Index gained 0.8 percent.
“U.K. GDP numbers missed estimates slightly, but it shows growth nevertheless and seems to satisfy the market,” said John Plassard, vice president at Mirabaud Securities LLP in Geneva. “All eyes are fixed on the Fed meeting that is expected to confirm a further decline in asset purchases.”
The volume of FTSE 100 shares changing hands today was 19 percent below the 30-day average, according to data compiled by Bloomberg.
An advance report showed that the U.K. economy expanded 3.1 percent in the first quarter from a year earlier, the biggest annual increase since the fourth quarter of 2007. That compared with 2.7 percent in the first three months of 2013. Economists in a Bloomberg News survey had forecast a 3.2 percent advance.
The U.S. Federal Reserve begins a two-day policy meeting today. The central bank reduced asset purchases in March to a monthly pace of $55 billion from $85 billion in December, and is preparing to eventually raise the federal funds rate for the first time since 2006. The Fed will probably cut bond buying to $45 billion at the meeting, according to the median of economists’ estimates compiled by Bloomberg.
BP added 2.9 percent to 502.6 pence after boosting its quarterly dividend 8.3 percent to 9.75 cents a share. BP also said that earnings adjusted for one-time items and inventory changes fell to $3.2 billion in the first quarter from $4.2 billion a year earlier. That was in line with the $3.2 billion average estimate of 10 analysts in a Bloomberg News survey.
HSBC rose 1.7 percent to 611.1 pence, as a gauge of European lenders posted the second-best performance of the 19 industry groups on the Stoxx Europe 600 Index. Standard Chartered Plc added 1.8 percent to 1,305 pence, while Lloyds Banking Group Plc gained 1.2 percent to 74.9 pence.
Wolfson Microelectronics Plc surged 75 percent to 234.5 pence after Cirrus Logic Inc. agreed to acquire the Scottish semiconductor developer for 235 pence per share in cash.
St. James’s Place Plc gained 2 percent to 779 pence. Chief Executive Officer David Bellamy said the British insurer and money manager may look to the Middle East for acquisitions after buying an advisory business in Asia.
Separately, the company reported 1.2 billion pounds ($2 billion) of net inflows in the first quarter and said its recent purchase of Singapore-based Henley Group Ltd. is close to receiving regulatory approval.
Telecity Group Plc rallied 15 percent to 728 pence. The builder and manager of technical and Internet infrastructure said it had a good start to the year with solid trading in the first quarter. The company also said its earnings before interest, tax and amortization margins showed good growth from a year earlier, and confirmed its target for 2014 revenue growth of 10 percent.
Serco slumped 15 percent to 343.8 pence. The company said yesterday after the close of European markets that it may make a “material” cut to its forecasts amid a more challenging than expected year so far, and will consider an equity issue to strengthen its balance sheet.
Separately, JPMorgan Chase & Co. said that Serco will probably reduce its estimates by at least 10 percent.
Shire Plc dropped 0.7 percent to 3,263 pence after people familiar with the matter said Allergan Inc. has contacted companies including Sanofi and Johnson & Johnson to see if they would be interested in acquiring the Botox maker. Shire earlier rose as much as 6.2 percent after Reuters reported that Allergan was preparing a takeover offer for the U.K. drugmaker to fight off an unsolicited bid from Valeant Pharmaceuticals Inc.