U.K. stocks rallied the most in more than a week after euro-area leaders agreed to ease conditions on bailout loans to Spanish banks and pledged to spend $152 billion to stimulate the region’s economy.
CRH Plc and Wolseley Plc led construction-related shares higher, both climbing at least 4 percent. Berkeley Group Holdings Plc advanced 3.6 percent after the housebuilder reported a 66 percent jump in annual profit. Vedanta Resources Plc and Antofagasta Plc climbed as copper surged.
The FTSE 100 Index surged 109.27 points, or 2 percent, to 5,602.33 at 2:30 p.m. in London, extending its monthly advance to 5.3 percent, the biggest since October. The gauge has still lost 2.9 percent this quarter, paring its gain for the year to 0.5 percent, as European Union policy makers struggled to contain the sovereign-debt crisis.
“The second quarter ends with some unexpected good news,” Ian Williams, a strategist at Peel Hunt LLP in London, wrote in a report to clients. “The European Union summit has at least agreed a short-term fix in permitting the EU’s rescue funds to intervene directly by buying sovereign debt and recapitalizing the banks without an impact on government deficits. It’s good enough for now.”
After 13 1/2 hours of talks ending at 4:30 a.m. in Brussels, the leaders of the 17 euro countries waived their governments’ preferred-creditor status on bailout loans to Spanish banks. They also opened the door to recapitalizing lenders directly using the European Stability Mechanism once the euro area sets up a single banking supervisor.
The broader FTSE All-Share Index rose 2 percent today, while Ireland’s ISEQ Index jumped 3 percent, its biggest increase since November, as Irish Prime Minister Enda Kenny said the burden on taxpayers may be eased by the EU agreement.
EU leaders discussed reducing the market pressure on Italy and Spain, by allowing them to access rescue loans without relinquishing control of their economies.
All but five companies on the FTSE 100 rose today as the EU leaders also agreed to a 120 billion-euro ($152 billion) plan to promote growth in the 27-nation bloc though infrastructure financing.