U.K. Stocks Advance as Fed Pledges to Keep Rates LowNamitha Jagadeesh
U.K. stocks rose for a third day as the Federal Reserve pledged to leave interest rates low for a considerable time and forecast the U.S. economy will continue to expand at a moderate pace.
CRH Plc added 3.3 percent, tracking gains in European construction and materials companies. Barratt Developments Plc and Berkeley Group Holdings Plc gained at least 3.5 percent, leading U.K. house builders higher. Rolls-Royce Holdings Plc advanced the most since October 2011 after announcing a 1 billion pound ($1.7 billion) share-buyback program.
The FTSE 100 Index increased 29.55 points, or 0.4 percent, to 6,808.11 at the close in London, paring earlier gains of as much as 0.9 percent. The benchmark gauge has climbed 0.8 percent since June 16 as energy companies rallied. The FTSE All-Share Index also added 0.4 percent today. Ireland’s ISEQ Index rose 1.4 percent, the most in a month.
“Yellen didn’t show any signs of urgency to end the Fed’s accommodative policy, which is bullish for equities in the short term,” said Manish Singh, who helps oversee about $2 billion as head of investments at Crossbridge Capital in London. “A good number of people were expecting Fed to be hawkish, but Yellen kept her claws well hidden. The reassurance is that the easy money policy has more to go.”
Fed Chair Janet Yellen said the central bank will keep interest rates low for a considerable time after ending its asset-purchase program, even as it saw improvements in the economy and labor market. Fed officials lowered their median estimate of the federal funds rate in the longer run to 3.75 percent from a 4 percent projection in March.
The Federal Open Market Committee trimmed monthly bond buying by $10 billion for a fifth time, to $35 billion. Economists in a Bloomberg survey forecast the central bank will end the program at its October meeting.
CRH, which earned more than half of its revenue from North and South America last year, gained 3.3 percent to 20.77 euros in Dublin. A gauge of construction and materials companies was the best performer among 19 industry groups in the Stoxx Europe 600 Index.
Ashtead Group Plc, a construction-equipment rental company that generated 85 percent of sales from the U.S. last year, climbed 4 percent to 863.5 pence.
A gauge of U.K. household-goods and home-construction companies in the FTSE 350 Index climbed 1.6 percent. Barratt Developments advanced 3.9 percent to 358.9 pence and Berkeley Group gained 3.5 percent to 2,316 pence.
Rolls-Royce surged 8.1 percent to 1,092 pence. The world’s second-largest maker of commercial-aircraft engine, which last month agreed to sell its energy assets to Siemens AG for $1.3 billion, said it will use the proceeds to buy back shares.
Man Group Plc climbed 6 percent to 105.1 pence, a two-month high, after agreeing to buy Numeric Holdings LLC. The world’s largest publicly traded hedge-fund manager will initially pay $219 million and as much as $275 million to Numeric’s management and employees five years after the deal is completed, depending on the profitability of the business, according to a statement. Closely held Numeric manages $14.7 billion, it said.
Supergroup Plc rallied 6.8 percent to 929.5 pence after Canaccord Genuity Group Inc said the recent decline in the stock price offered a buying opportunity and that the likelihood of another cut in the company’s profit forecasts is low. Supergroup has halved since an April 1 peak through yesterday’s close after the company last month forecast full-year profit at the lower end of the consensus of analysts’ estimates.
Shire Plc dropped 1.2 percent to 3,738 pence. The drugmaker rallied 7.8 percent in the past three days amid speculation that it is a takeover target. John Boris, an analyst at SunTrust Robinson Humphrey, wrote in a note yesterday that Allergan Inc. plans to bid for the company.