U.K. Stocks Rise, Led by Commodity Producers; Tullow Oil Gains

By Sarah Jones

Aug. 20 (Bloomberg) -- U.K. stocks rose for the first time in four days, led by commodity producers as UBS AG recommended shares of Tullow Oil Plc and crude oil climbed. BHP Billiton Ltd. and Rio Tinto Group led a rally in mining companies.

Tullow Oil, the U.K. explorer with the most exploration licenses in Africa, rose the most since May. BHP, the world's biggest mining company, advanced 6.1 percent, and Rio Tinto, the third-largest, had its steepest gain in six months.

The FTSE 100 Index gained 34.5, or 0.7 percent, to 5,354.9 at 1:41 p.m. in London. The FTSE All-Share Index added 0.5 percent, while Ireland's ISEQ Index declined 1.5 percent.

Tullow Oil rallied 6.7 percent to 740.5 pence after UBS upgraded the U.K. explorer to ``buy'' from ``neutral,'' citing future drilling potential and the possibility of a takeover bid.

``Further exploration success could possibly make Tullow a mergers & acquisition target next year,'' Adrian Wood, a London- based analyst, wrote in a note. ``The company plans to drill 14 wells over the balance of the year.''

BP Plc, Europe's second-largest oil company, advanced 1.5 percent to 514.75 pence, as crude oil climbed for a second today. Royal Dutch Shell Plc, Europe's biggest, added 2 percent to 1,831 pence.

BHP jumped 93 pence to 1,613. Rio Tinto gained 6.8 percent to 4,957 pence. Anglo American Plc, the world's second-largest mining company, gained 2.7 percent to 2,758 pence. Gold and silver rose for the third day in Asia, while base metals including tin and nickel advanced on the London Metal Exchange.

Whitbread, MAN Group

Whitbread Plc advanced for the first time this week as Credit Suisse Group rated the shares ``outperform'' in new coverage. Man Group Plc gained after its flagship fund rose for the first week in five.

Whitbread increased 0.5 percent to 1,125 pence. Credit Suisse said the company's Premier Inn budget hotels chain was well positioned to consolidate the U.K market and increase market share.

Man Group increased 4.7 percent to 531 pence after the largest publicly traded hedge-fund manager said its flagship fund rose for the first week in five, snapping its longest losing stretch in a year.

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

Capital & Regional Plc (CAL LN) jumped 7.5 pence, or 4.6 percent, to 169.5 after Apollo Real Estate Advisors LLC agreed to pay 65.6 million euros ($97 million) for a 50 percent stake in the company's German retail properties.

J Sainsbury Plc (SBRY LN) slid 10 pence, or 3.1 percent, to 316.75 after JPMorgan Chase & Co. downgraded the U.K.'s third biggest supermarket chain to ``neutral'' from ``overweight'' on concern that sales will worsen as customers switch to cheaper retailers.

Woolworths Group Plc (WLW LN) increased 0.1 pence, or 1.5 percent, to 6.86 after the Financial Times reported the retailer is still open to negotiations with the group led by Baugur Group Hf after Woolworth's board rejected the group's proposed 50 million-pound bid on Aug. 17. The newspaper cited Chairman Richard North.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.