U.K. Stocks Gain for a Second Day; British Land Leads Advance

By Sarah Thompson

Sept. 9 (Bloomberg) -- U.K. stocks advanced for a second day, extending the FTSE 100 Index's steepest rally in eight months, led by British Land Co., after Lehman Brothers Holdings Inc. raised its rating on the property sector and said the industry may have reached a bottom.

The FTSE 100 Index climbed 58.6, or 1.1 percent, to 5,504.9 at 9:10 a.m. in London. The FTSE All-Share Index added 1 percent while Ireland's ISEQ Index increased 1.3 percent.

The FTSE 100 surged 3.9 percent yesterday on speculation the U.S. government's takeover of Fannie Mae and Freddie Mac will shore up the mortgage market.

British Land rose 4 percent to 784.50 pence, the highest in almost a month, and Land Securities Plc added 2.5 percent to 1,373 pence. The U.K.'s two largest real estate companies, were upgraded to ``overweight'' from ``equal-weight'' by London-based real estate analyst Mike Prew in a note to clients yesterday.

The brokerage also raised its recommendation on the industry to ``positive.'' `The sector appears priced for stagflation and we do not think it will get much cheaper,'' Prew wrote. ``Within the last month, we view the sector's downside as having been superseded by its recovery potential.''

Derwent London Plc and Great Portland Estates Plc, which both focus on London's West End district, were also upgraded. The shares rose 3 percent to 1,097 pence and 2.5 percent to 368.25 pence respectively.

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

U.K. companies:

BG Group Plc (BG/ LN) added 4 pence, or 0.4 percent, to 1,097. The U.K.'s third-biggest oil and gas company said it won't increase or extend its hostile takeover offer for Origin Energy Ltd., Australia's biggest producer of natural gas from coal seams.

British Energy Plc (BGY LN) declined 6.5 pence, or 0.9 percent, to 727. The French government and other large shareholders haven't authorized Electricite de France SA to improve the cash portion of its failed offer for British Energy, Dow Jones Newswires said in an article on the Wall Street Journal Web site, citing a person familiar with the matter.

IG Group Holdings Plc (IGG LN) increased 9.75 pence, or 2.9 percent, to 342.25. IG, which takes bets on financial markets under the IG Index name, said first-quarter revenue gained 29 percent as increased stock market volatility prompted more gamblers to open accounts.

Imperial Tobacco Group Plc (IMT LN) advanced 11 pence, or 0.6 percent, to 1,786. Europe's second-largest cigarette maker raised $2.2 billion from a sale of bonds in euros and pounds, according to HSBC Holdings Plc, one of the banks managing the issue. .

Lloyds TSB Group Plc (LLOY LN) gained 2.75 pence, or 0.9 percent, to 312.75. The U.K.'s biggest provider of checking accounts is ``comfortable'' it can maintain sufficient capital through 2012, Finance Director Tim Tookey said.

Omega Insurance Holdings Ltd. (OIH LN) added 4.5 pence, or 3 percent, to 153. The Lloyd's of London insurer said first-half profit rose 34 percent.

Qinetiq Group Plc (QQ/ LN) slid 17.25 pence, or 7.7 percent, to 206.25. The U.K. government is selling its entire stake in the U.K.'s largest defense-research company.

To contact the reporters on this story: Jonathan Browning in London jbrowning9@bloomberg.netSarah Thompson in London at sthompson17@bloomberg.net.