U.K. Stocks Gain for Second Day; BP, Shell Climb on Iraq

U.K. stocks rose for a second day, with oil companies gaining, before the Federal Reserve’s decision on U.S. interest rate and the pace of asset purchases.

BP Plc and Royal Dutch Shell Plc added more than 1.5 percent each as violence in Iraq drove oil prices higher. Shire Plc extended a record after an analyst said Allergan Inc. plans to make an offer for it. Zoopla Property Group Plc climbed 4.6 percent on its first day of trading in London. Premier Foods Plc tumbled the most since November after forecasting a sales drop for its so-called grocery power brands.

The FTSE 100 Index gained 11.79 points, or 0.2 percent, to 6,778.56 at the close in London. The FTSE All-Share Index added 0.2 percent today, while Ireland’s ISEQ Index lost 0.9 percent.

“The Fed can’t be too hawkish, given the current geopolitical background,” said Pierre Mouton, who helps oversee about $8 billion at Notz, Stucki & Cie. in Geneva. “Iraq has the potential to cause huge trouble. In the long run, rising oil prices are bad for the economy and the consumer. But energy companies with a high exposure to exploration and production benefit a lot.”

In the U.S., the Federal Open Market Committee will reduce the pace of monthly asset purchases by $10 billion to $35 billion, according to the median of estimates compiled by Bloomberg News. About 62 percent forecast that the Fed will end its bond-buying program at the October meeting. Officials will release quarterly projections for economic growth and the benchmark federal funds rate at the conclusion of a two-day meeting after the close of European markets today.

BOE Minutes

Minutes of the June 4-5 meeting released today showed the Monetary Policy Committee voted unanimously to keep the benchmark rate at a record low of 0.5 percent, where it’s been since March 2009. The FTSE 100 fell 1.2 percent last week after BOE Governor Mark Carney said interest rates may increase sooner than expected and Britain pledged to give the central bank powers to rein in mortgage lending.

Oil futures climbed as Islamist militants and elite forces sought to take control of the Baiji refinery, the largest crude-processing plant in Iraq. BP advanced 1.6 percent to 514.4 pence, and Shell gained 1.8 percent to 2,533 pence. Separately, Shell said it will sell shares in a U.S. pipeline business later this year.

Allergan Bid

Shire rose 3.4 percent to 3,785 pence. Buying Shire would allow Allergan to diversify into treatments for rare diseases and would provide a lower corporate tax rate, John Boris, an analyst at SunTrust Robinson Humphrey, wrote in a note.

Zoopla increased 4.6 percent to 230 pence. Shares of the owner of real estate websites Zoopla and PrimeLocation priced at 220 pence each for a market value of 918.8 million pounds ($1.6 billion). Daily Mail and General Trust Plc, which owns 33.7 percent of Zoopla, advanced 3.1 percent to 840 pence. Rival Rightmove Plc gained 1.4 percent to 2,200 pence.

Vodafone Group Plc gained 1.5 percent to 198.1 pence. Amazon.com Inc. is in talks with the U.K. company and Telefonica SA’s O2 for the rights to sell its smartphone in the U.K., the Financial Times reported yesterday, citing unidentified people familiar with the matter. Amazon will unveil its first smartphone today.

Premier Foods tumbled 9.6 percent to 52 pence after predicting a drop in second-quarter sales of power brands, including Mr. Kipling cakes and OXO stock cubes. The company cited a weak market for groceries.

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