U.K. stocks climb as economy avoids third recession since 2008

Avoiding the triple dip gives stocks some energy

U.K. stocks climbed, with the FTSE 100 Index extending its highest level in three weeks, as a report showed Britain avoided a triple-dip recession. 

Vodafone Group Plc climbed to a one-week high after a report that Verizon Communications Inc. may offer $100 billion for full control of Verizon Wireless. Unilever lost 2.7 percent after the world’s second-largest consumer-goods company posted the slowest quarterly revenue growth in two years. AstraZeneca Plc slid 2.5 percent as first-quarter sales missed estimates. 

The FTSE 100 gained 15.08 points, or 0.2 percent, to 6,446.84 at 3:43 p.m. in London, after gaining as much as 0.6 percent and losing as much as 0.3 percent. The gauge yesterday completed its biggest two-day rally since Jan. 3 as companies reported sales that beat estimates and commodity producers rose. The broader FTSE All-Share Index advanced 0.3 percent, while Ireland’s ISEQ Index was little changed today. 

“There’s still no end to the debate on the primary cause of the slow growth in the U.K.,” said Tom Elliott, global market strategist at JPMorgan Asset Management in London, which oversees $1.5 trillion globally. “Is it austerity or is it weak growth in the euro zone? I saw Unilever reporting very weak growth largely because of Europe, so there’s undoubtedly an element there.”

U.K. Growth

Britain’s gross domestic product grew 0.3 percent in the first quarter, according to a report from the Office for National Statistics. That beat the 0.1 percent median estimate of economists in a Bloomberg survey. The economy avoided entering its third recession since 2008 by rebounding from a contraction of 0.3 percent in the final three months of 2012. Economists define a recession as two successive quarters of shrinking output. 

“I don’t think we should be ‘hurrahing’ too much,” Elliott said. “These numbers can be revised all over the place. When estimates are based on a subjective view of the effect of weather, you have to treat them with a pinch of salt.” 

In the U.S., applications for jobless benefits decreased by 16,000 to 339,000 in the week ended April 20, the lowest number in six weeks, according to a Labor Department report. Economists had predicted 350,000 claims, according to the median estimate in a Bloomberg survey. 

Vodafone, the second-biggest stock on the FTSE 100, advanced 1.4 percent to 195.9 pence. New York-based Verizon has hired advisers to prepare a possible $100 billion cash-and-stock bid for Vodafone’s 45 percent stake in Verizon Wireless, Reuters said, citing two people it didn’t identify. Brenda Raney, a spokeswoman for Verizon Wireless, declined to comment to Bloomberg News. 

BAT Rises 

British American Tobacco Plc gained 1.3 percent to 3,593.5 pence. The maker of Pall Mall and Dunhill cigarettes said first- quarter sales excluding currency shifts rose 5 percent, exceeding the 3.7 percent average estimate of analysts surveyed by Bloomberg. 

A gauge of London-listed commodity producers rose for a third day. Randgold Resources Ltd. and Lonmin Plc, which both operate mines in Africa, rallied 5.1 percent to 5,300 pence and 6.2 percent to 290.8 pence, respectively. U.K. mining stocks have still fallen 13 percent this year.

Unilever lost 2.7 percent to 2,767 pence. Sales excluding acquisitions, disposals and currency fluctuations, rose 4.9 percent from a year earlier, the maker of Dove soap said. The average estimate of 12 analysts surveyed by Bloomberg had called for a gain of 5.5 percent.

AstraZeneca dropped 2.5 percent to 3,306 pence, its biggest decline in two months. The U.K.’s second-largest pharmaceutical company said quarterly revenue fell 13 percent to $6.39 billion, missing the $6.55 billion average analyst prediction.

 

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Comments
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome