U.K. Stocks Rise, Led by Banks, Insurers; Barclays Leads Gains

By Adam Haigh

July 23 (Bloomberg) -- U.K. stocks rose, led by banks and insurers, after Deutsche Bank AG said financial companies are overcoming credit losses and Goldman Sachs Group Inc. added Standard Life Plc and Friends Provident Plc to its ``conviction buy'' list. Barclays Plc paced the advance.

HBOS Plc rallied on takeover speculation. Losses from banks have not spread as ``much as feared,'' Deutsche Bank analyst Mike Mayo wrote in a note to clients. Vodafone Group Plc gained after saying it will buy back 1 billion pounds ($2 billion) of shares. Carnival Plc and Thomas Cook Group Plc rose as oil traded below $125 a barrel.

``The summary of the U.S. banks' earnings has been `so far, so good' and this can be seen as some light at the end of the tunnel,'' said Richard Hunter, London-based head of U.K. equities at Hargreaves Lansdown Stockbrokers, a unit of Hargreaves Lansdown Plc, which oversees $21.5 billion. ``The general market consensus is positive towards Vodafone.''

The benchmark FTSE 100 Index gained 65.7, or 1.2 percent, to 5,429.8 at 12:23 p.m. in London. The FTSE All-Share Index advanced 1.3 percent. Ireland's ISEQ Index climbed 4 percent.

Barclays, Britain's fourth-largest bank, added 4.9 percent to 330 pence. HSBC Holdings Plc rose 1.3 percent to 824 pence.

Deutsche Bank's Mayo said he is less ``negative'' on earnings for U.S. banks after Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. reported better-than-expected earnings.

HBOS, the U.K.'s largest mortgage lender, soared 12 percent to 291.25 pence.

``The sector has been lifted by HBOS, which is up on talk of bid interest from Spanish bank BBVA,'' said Nick Mitchell, a trader at CMC Markets in London.

A spokesperson for BBVA and HBOS spokesman Shane O'Riordain declined to comment on speculation Banco Bilbao Vizcaya Argentaria SA may consider making an offer.

Standard Life, which gets more than three-quarters of its revenue from the U.K., added 3.7 percent to 225 pence. Friends Provident, the 176-year-old British insurer, advanced 10 percent to 88.1 pence.

Standard Life will benefit from ``strong new business'' from self-invested personal pensions and ``very little risky asset exposure,'' London-based Goldman analyst Colin Simpson wrote in a note to clients initiating coverage on the stock.

Friends Provident, the worst-performing stock on the Bloomberg Europe 500 Insurance Index this year, offers the potential for growth following asset sales and ``superior value,'' Goldman said.

Separately, HSBC said the European insurance industry is ``adequately capitalized'' and dividends are ``increasingly attractive.''

Vodafone advanced 1.2 percent to 130.6 pence after saying its shares are ``significantly'' undervalued after yesterday's 14 percent drop.

Separately, Morgan Stanley upgraded the stock to ``equal- weight'' from ``underweight,'' saying the share price now discounts an ``extreme decline'' in free cash flow. The brokerage has a price estimate of 170 pence on the shares.

Carnival, world's largest cruise-line company, added 5.2 percent to 1,902 pence, while Thomas Cook, Europe's second- biggest travel company, gained 3.8 percent to 213.25 pence.

Crude oil dropped as much as 1.7 percent in New York as a stronger U.S. dollar limited its appeal as a hedge against inflation.

The following stocks also rose or fell in the U.K. market. Stock symbols are in parentheses.

U.K. Companies:

Daily Mail and General Trust Plc (DMGT LN) advanced 17.75 pence, or 5.7 percent, to 330. The publisher of Britain's Daily Mail newspaper said third-quarter revenue grew 5 percent on expansion of the tradeshow management and Internet businesses.

GlaxoSmithKline Plc (GSK LN), Europe's largest drugmaker, slid 7.25 pence, or 4.7 percent, to 145.75 after saying second- quarter profit fell 3.5 percent following job cuts and asset sales which failed to overcome a decline in revenue from the Avandia diabetes pill.

Halfords Group Plc (HFD LN), the largest retailer of car parts and bicycles, added 13.25 pence, or 4.8 percent, to 289.75 after saying first-quarter profit was ahead of expectations.

International Personal Finance Plc (IPF LN) climbed 12 pence, or 4.3 percent, to 294. The U.K provider of unsecured cash loans reported an increase in first-half net income to 15.5 million pounds from 8.1 million pounds a year earlier.

Paragon Group Cos. (PAG LN) advanced 1.75 pence, or 1.6 percent, to 111.75 after the Financial Times reported TPG Capital is considering a bid, citing people close to the U.S. buyout firm.

Raymarine Plc (RAY LN) slid 7 pence, or 4.6 percent, to 146. Panmure Gordon & Co. cut its recommendation on the stock to ``hold'' from ``buy'' following the recent share price rally and expectations the company is ``vulnerable to further earnings disappointments.''

The share had gained 39 percent from July 16 before today's trading.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net