BS: U.K. Stocks Rise From Three-Month Low as Mining Companies Climb
June 17 (Bloomberg) -- U.K. stocks climbed, erasing earlier losses as investors speculated that European officials may soon reach a resolution on Greece’s bailout package.
Anglo American Plc and Kazakhmys Plc led a rally in mining companies as copper rebounded in London. Aggreko Plc and GKN Plc also paced advancing shares.
The FTSE 100 climbed 0.5 percent to 5,729.64 at 1:06 p.m. in London after earlier falling as much 0.9 percent. The gauge is still on track for a fourth consecutive weeks of declines amid lingering concern Greece may default on its debt. The FTSE All-Share Index rose 0.5 percent today while Ireland’s ISEQ Index rallied 1.2 percent.
Stocks erased losses after Chancellor Angela Merkel retreated from demands that bondholders shoulder a “substantial” part of the cost of a Greek rescue, saying she’ll work with the European Central Bank to avoid disrupting markets. Merkel was speaking at a joint press conference with French President Nicolas Sarkozy in Berlin.
“It’s likely the market took heart from Germany’s concession and continued support from France,” said London- based Ioan Smith, a director at Knight Capital Europe Ltd. “Investors haven’t got carried away as yet. The risk now is with Greece and whether they approve a new austerity package.”
The euro strengthened and Greek bonds rallied as Merkel and Sarkozy signaled a reconciliation between German calls for investors to help bail out Greece with warnings from the ECB and France that a compulsory move risked triggering the euro area’s first sovereign default.
Greek Risk
Former Federal Reserve Chairman Alan Greenspan said in an interview yesterday that a Greek default is “almost certain” and could help drive the U.S. into recession, while Luxembourg’s Jean-Claude Juncker, head of the euro-region finance ministers group, said a “hard haircut” for bondholders will risk contagion to other European countries.
Anglo American led a rebound in mining companies, climbing 1.9 percent to 2,864 pence. Kazakhmys Plc gained 1.8 percent to 1,262 pence and Xstrata Plc rose 1.9 percent to 1,271.5 pence.
Copper for delivery in three months rose as much as 0.8 percent to $9,140 a metric ton on the London Metal Exchange. Nickel, tin and zinc also rallied.
Aggreko, the world’s largest provider of mobile power supplies, climbed 1.8 percent to 1,899 pence after Goldman Sachs Group Inc. reiterated its “conviction buy” recommendation and raised its 12-month price estimate for the shares by 1 percent to 2,506 pence. That’s 34 percent above yesterday’s closing price.
GKN climbed 1.9 percent to 205.9 pence, rising for the first time in three days as RBC reiterated its “outperform” recommendation, saying the stock’s decline represented a buying opportunity.
--Editors: David Risser, Jerrold Colten.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
