U.K. Stocks Rise to Two-Month High as Barclays AdvancesNamitha Jagadeesh
U.K. stocks rose to their highest level since February as Barclays Plc and BT Group Plc advanced, while European Central Bank President Mario Draghi said policy makers are prepared to take action in June.
Barclays jumped the most in almost 15 months as the lender said it will cut more jobs than it had planned. BT climbed 2.9 percent after the former telecommunications monopoly posted quarterly earnings that beat analysts’ estimates. Centrica Plc slipped 2 percent after the owner of British Gas forecast 2014 earnings that trailed analysts’ projections.
The FTSE 100 Index added 42.81 points, or 0.6 percent, to 6,839.25 at the close in London. The benchmark has climbed 4.9 percent from a March 24 low amid an increase in mergers-and-acquisitions activity. The rebound leaves the gauge 0.4 percent away from the 14-year high it reached on Feb. 24. The FTSE All-Share Index also advanced 0.6 percent today, while Ireland’s ISEQ Index rallied 1.5 percent.
“Barclays’ announcements today were well received,” said Guy Foster, the London-based head of portfolio strategy at Brewin Dolphin Ltd., which oversees about 28 billion pounds ($47.5 billion). “With inflationary pressures low and a generally positive growth environment, it’s pretty positive for U.K. equities for the time being.”
Draghi said the ECB plans to examine inflation projections due in early June before deciding whether to take further action. Eurostat’s preliminary reading of euro-zone inflation -- released on April 30 -- missed forecasts. The core rate, which strips out volatile items including energy, food, alcohol and tobacco, rose in line with estimates to 1 percent.
“There is a consensus about being dissatisfied about the projected path of inflation,” Draghi said in Brussels. “The Governing Council is comfortable acting next time.”
The ECB kept its benchmark interest rate at a record low of 0.25 percent, as predicted by all but two of 58 economists surveyed by Bloomberg. Separately, the Bank of England also left its key rate at 0.5 percent and its asset-purchase target at 375 billion pounds, matching the median economist estimates.
Barclays climbed 7.9 percent to 262.5 pence after announcing that it will cut 14,000 jobs this year, increasing the total reduction in its workforce by 2016 to 19,000. The lender said it would reduce its workforce by 12,000 in a statement in February. Barclays also revealed that it will create a bad bank to dispose of 115 billion pounds of assets.
BT advanced 2.9 percent to 387.6 pence after saying earnings before interest, taxes, depreciation and amortization rose 2 percent to 1.71 billion pounds in the fourth quarter of its financial year. That exceeded the 1.66 billion-pound average prediction of analysts in a Bloomberg survey.
Standard Chartered Plc gained 2 percent to 1,306.5 pence after posting a decline in first-quarter profit that was in line with its own forecast and saying margins stabilized. Group Finance Director Richard Meddings said on a conference call that momentum has improved since the second half of last year.
Perform Group Plc surged 6.8 percent to 250 pence after saying it will meet its full-year sales-growth forecast. The online sports group also posted first-quarter revenue that climbed 32 percent to 56.9 million pounds and named Ashley Milton as its Chief Financial Officer. He currently works as CFO of WPP Plc’s media-investment division.
Centrica declined 2 percent to 320.4 pence after the U.K.’s largest energy supplier to households forecast adjusted earnings of 22 pence to 23 pence a share. Analysts on average had projected 25 pence. The company, which in February predicted profit will decline this year, said the average its U.K. customers paid this winter dropped 10 percent from a year earlier because of the mild weather.
Sage Plc dropped 5.3 percent to 399.5 pence, its biggest decline in two years. The software maker reported revenue of 657 million pounds for the first half of its financial year, trailing the average analyst projection of 664.5 million pounds. Sage also said Guy Berruyer will retire as Chief Executive Officer no later than March 31, 2015.