U.K. Stocks Rise to Three-Week High; Mining Shares Rally
U.K. stocks advanced to their highest level in more than three weeks as a measure of house prices jumped and economic reports from China beat forecasts.
Gauges of London-listed construction and mining companies gained. Glencore Xstrata Plc rose 2.3 percent after increasing its estimate of the synergies from the takeover of Xstrata Plc. GlaxoSmithKline Plc (GSK) slid 2.5 percent for the largest drag on the FTSE 100 Index (UKX) as investors assessed U.S. guidelines for bringing generic versions of Glaxo’s asthma drug to market.
The FTSE 100 gained 53.25 points, or 0.8 percent, to 6,583.99 at the close of trading in London. The equity benchmark has still fallen 3.8 percent since May 22, which was its highest level since 1999, amid speculation that the Federal Reserve will begin reducing its monthly asset purchases as early as this year. The broader FTSE All-Share Index added 0.9 percent today, while Ireland’s ISEQ Index increased 1 percent.
“The improvement in the housing market boils down to confidence,” Leigh Himsworth, who helps oversee about $1 billion as head of U.K. equities at City Financial in London, said in a telephone interview. “It’s a feel-good factor in many people’s lives and goes a long way to explaining why investors and corporates are happier to invest.”
The number of shares trading hands in FTSE 100-listed stocks was 17 percent greater than the average of the past 30 days, data compiled by Bloomberg showed.
A gauge of U.K. house prices rose to the highest level since November 2006 in August as the government’s Help to Buy plan and the economic recovery increased demand. The Royal Institution of Chartered Surveyors’ index, which is based on a poll of property surveyors, increased to 40 from a revised 37 in July. A proxy measure of demand rose to a record, while the outlook for prices advanced to the highest since 2002.
Housebuilders listed on the broader FTSE 350 Index rose with Bellway Plc adding 1.3 percent to 1,404 pence. Taylor Wimpey Plc gained 1.3 percent to 107.3 pence and Berkeley Group Holdings Plc advanced 1.2 percent to 2,198 pence.
In China, industrial output rose 10.4 percent in August from a year earlier. Economists had predicted that production would increase 9.9 percent after a 9.7 percent gain in July, according to the median estimate compiled by Bloomberg. Retail sales (CNRSCYOY) jumped 13.4 percent, compared with a projected 13.3 percent advance and a 13.2 percent climb the previous month.
The FTSE 350 Mining Index added 1.8 percent to its highest level since May 22 as BHP Billiton Ltd. and Rio Tinto Group rose 1.7 percent to 1,939 pence and 2.8 percent to 3,217.5 pence, respectively. Anglo American Plc (AAL) gained 2.4 percent to 1,632 pence, paring its decline this year to 14 percent.
Glencore Xstrata advanced 2.3 percent to 328.75 pence, its seventh day of gains. The acquisition will generate a minimum of $2 billion in synergies including cost savings next year, the Baar, Switzerland-based company said in a statement. That exceeded its initial forecast of $500 million.
Ashmore Group Plc (ASHM) rallied 5.3 percent to 382.2 pence, its highest price in more than three months. The fund manager, which specializes in emerging markets, said it will pay a final dividend of 11.75 pence a share, compared with 10.75 pence a share a year earlier.
Gulf Keystone Petroleum Ltd. (GKP) surged 17 percent to 219.3 pence as trading resumed after the company won a lawsuit brought by a former business partner. The ex-U.S. Special Forces captain had sought a stake in the explorer’s projects in Iraq. The judge ruled that the claimant’s company, Excalibur Ventures LLC, failed to meet its obligations under a contract with Gulf Keystone, so it had no valid claim.
Glaxo, which accounts for 4.7 percent of the FTSE 100, declined 2.5 percent to 1,598.5 pence. The Food and Drug Administration revised its guidelines for introducing generic versions of Glaxo’s Advair drug, making it easier for competitors to sell their own products, according to Goldman Sachs Group Inc. The rule changes increase pressure on Glaxo’s forthcoming treatments because Advair accounts for about 10 percent of the drugmaker’s U.S. sales, Goldman Sachs said.
Whitbread Plc slipped 2.4 percent to 3,138 pence after saying like-for-like sales grew 3 percent at its Costa Coffee (WTB) shops in the 11 weeks through Aug. 15. That compares with 8 percent growth for the 13-week period ending May 30.
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