U.K. stocks advanced as a drop in the
pound sparked a rally in exporters, offsetting a continued sell off in banking
shares.
AstraZeneca
Plc and Imperial Tobacco Group Plc rose more than 2 percent as the pound
tumbled against the U.S. dollar and euro, increasing the value of sales made
overseas. IG Group Plc advanced 14 percent after saying first-half profit
gained on increased short-term trading on currencies.
Lloyds
Banking Group Plc plunged to the lowest since at least 1998 as Merrill Lynch
& Co. said the lender has too little capital and will struggle with funding
and bad assets.
The benchmark
FTSE 100 Index added 25.93, or 0.6 percent, to 4,134.4 in London at 12:48 p.m. The Dow Jones Stoxx 600
Index, a benchmark for European stocks, lost 0.7 percent. The FTSE All- Share
Index gained 0.5 percent, while Ireland’s
ISEQ Index dropped 1.3 percent.
“The U.K. is outperforming its European
discount
cigarettes peers today which reflects the weakness we are seeing in
the currency,” said Graham Secker, a U.K.
equity strategist at Morgan Stanley in London.
“It’s a natural hedge.”
The pound
breached $1.40 for the first time since 2001 and had its biggest drop against
the euro in a month after the U.K.’s
second bank-bailout plan in three months, announced yesterday, raised concern
the global financial crisis is deepening.
AstraZeneca,
the U.K.’s second-largest
drugmaker which generated than 50 percent of its revenue in the Americas in
2007, increased 2.1 percent to 2,819 pence. Imperial Tobacco, which made just 8
percent of its revenue in the U.K.
last year, climbed 2.8 percent to 1,960 pence. ICAP Plc jumped 4.6 percent to
267.25 pence. The world’s biggest broker of trades between banks generated 41
percent of its revenue in the Americas
in 2008.
IG Group
Gains
IG Group,
owner of the IG Index financial-market betting brand, advanced 14 percent to
254 pence. Net income for the six months through November rose to 37.7 million
pounds ($52.7 million) from 33.1 million pounds a year earlier. Revenue climbed
47 percent to 126.5 million pounds, slightly above company forecasts from
November.
Lloyds,
which completed the takeover of HBOS Plc yesterday, lost 23 percent to 49.8
pence, extending its 34 percent retreat in the previous session when banking
stocks tumbled the most since 1985.
“The merger
of HBOS and Lloyds TSB creates a bank which will face challenges on capital,
funding and asset quality,” wrote Manus Costello, a London-based analyst at
Merrill Lynch. “We expect Lloyds Banking to lose money in 2008, 2009 and 2010,
largely a result of bad-debt provisions.”