U.K. Stocks Gain on U.S. Economy Report; Wolseley Shares Rise

By Alexis Xydias

Aug. 28 (Bloomberg) -- U.K. stocks advanced to the highest this month, led by companies that sell their products in the U.S. after a report showed the world's largest economy grew faster than expected last quarter.

Wolseley Plc, the world's biggest distributor of plumbing and heating equipment, and Invensys Plc, the maker of Whirlpool washing machine controls, climbed.

The benchmark FTSE 100 Index rose 66.60, or 1.2 percent, to 5,594.7 at 2:17 p.m. in London. The FTSE All-Share Index climbed 1.2 percent and Ireland's ISEQ Index gained 2.5 percent.

```The economic numbers are certainly slightly encouraging,'' said Patrick Evershed, a director at New Star Asset Management Ltd. in London. ``The stock market is welcoming what may be a bit of a breather in the economy.''

Wolseley jumped 6 percent to 442.5 pence. Invensys climbed 3.6 percent to 277.75 pence. Both companies count North America as their biggest markets.

The U.S. economy grew 3.3 percent in the second quarter, faster than previously estimated, helped by surging exports and a smaller decline in inventories, the Commerce Department said today.

Bodycote Plc jumped 8.1 percent to 227 pence. The U.K. supplier of metal-strengthening services to Ford Motor Co. said it agreed to sell its testing division for $765 million and return cash to investors.

Kazakhmys Plc fell 2.2 percent to 1,309 pence. Kazakhstan's biggest copper producer posted a 23 percent drop in first-half profit to $608.4 million, after cold weather and repairs cut output at two smelters.

Severn Trent Declines

Severn Trent Plc, the U.K.'s second-biggest water company, declined 2 percent to 1,377 pence and United Utilities Group Plc, the U.K.'s largest publicly traded water company, lost 1.5 percent to 710.5 pence.

Goldman Sachs Group Inc downgraded the shares to ``sell'' from ``neutral,'' saying both look ``overpriced'' relative to the utilities sector.

The following stocks also rose or fell in London and Dublin. Stock symbols are in parentheses:

U.K. Stocks:

Amec Plc (AMEC LN), which provides services for the world's largest energy companies including Exxon Mobil Corp., rose 32 pence, or 3.9 percent, to 855.5. The company said first-half profit rose 34 percent after it won contracts from oil and gas producers.

Irish Stocks:

Irish Life & Permanent Plc (IPM ID) jumped 53 cents, or 9 percent, to 6.45 euros. Ireland's largest mortgage lender rose for a third day after yesterday saying it has no plans to raise capital from investors.

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.