U.K. Stocks Rise, Extending Weekly Gain; Rio Tinto Leads Rally
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By Adam Haigh
Dec. 4 (Bloomberg) -- U.K. stocks rose, with the FTSE 100 Index extending this week’s advance, after a government report showed the U.S. rate of unemployment declined in November.
Rio Tinto Group, the world’s third-largest mining company, and BP Plc led a rally among raw-material producers as the U.S. cut the fewest jobs last month since the recession began.
The benchmark FTSE 100 Index climbed 31.71, or 0.6 percent, to 5,344.71 at 1:49 p.m. in London, bringing this week’s gain to 1.9 percent. The measure has rebounded 52 percent from its low on March 3 as governments committed about $12 trillion and central banks cut interest rates to record lows to end the global recession and revive credit markets. The FTSE All-Share Index increased 0.5 percent today, while Ireland’s ISEQ Index advanced 1 percent.
“You absolutely still want to be in equities,” said Julian Chillingworth, who helps manage the equivalent of $17.4 billion as chief investment officer at Rathbone Unit Trust Management in London. “As long as we don’t see a tightening by the Federal Reserve by the third quarter of next year then equities are absolutely fine.”
U.S. payrolls fell by 11,000 workers, less than the median estimate of economists surveyed by Bloomberg News, figures from the Labor Department showed today in Washington. The jobless rate declined to 10 percent.
Rio Tinto gained 2.4 percent to 3,258.5 pence. BP, Europe’s second-biggest oil producer, rose 1.1 percent to 588.7 pence.
‘Funding Crisis’
Berkeley Group Holdings Plc tumbled 3.7 percent to 859 pence. The third-largest U.K. homebuilder by market value said first-half profit declined 35 percent to 37 million pounds ($61 million) in the six months ended Oct. 31 after the company sold cheaper properties.
The U.K. may face a “government funding crisis” next year, according to Credit Suisse Group AG equity strategists who cut U.K. stocks to “underweight.” The FTSE 100 may rise as high as 5,750 by the middle of 2010 before dropping to 5,300 by year-end, the bank forecast. Credit Suisse lowered its stance on U.K. equities from a “small overweight” to “underweight” within a global stocks portfolio.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.
Last Updated: December 4, 2009 09:00 EST
