By Sarah Jones
Oct. 29 (Bloomberg) -- U.K. stocks jumped, advancing for a second day, led by banks and commodity producers on speculation central banks will cut interest rates.
HBOS Plc, Britain's largest mortgage lender, and Standard Chartered Plc rallied more than 15 percent in London. Royal Dutch Shell Plc and BHP Billiton Ltd. advanced as crude oil and copper climbed. Old Mutual Plc surged 27 percent, leading a rebound in insurance stocks.
The FTSE 100 Index gained 199.8, or 5.1 percent, to 4,126.18 at 10:58 a.m. in London, as all but three stocks advanced, trimming its decline for the month to 16 percent. The FTSE All- Share Index added 4.7 percent, while Ireland's ISEQ Index increased 7.3 percent.
``Sentiment has turned around on hopes of rate cuts around the world,'' said Mark Outten, a London-based senior dealer at GFT Global Markets. ``The market has priced in a 50 basis points cut by the Federal Reserve tonight, but a chance of more is being talked about in the market.''
The U.S. Federal Open Market Committee today will probably cut its benchmark rate by half a percentage point to 1 percent, according the median forecast of economists surveyed by Bloomberg. China cut rates for the third time in two months to stimulate growth. The Nikkei newspaper reported the Bank of Japan will lower rates for the first time in seven years.
HBOS jumped 16 percent to 79.8 pence. Standard Chartered Plc, the U.K.'s third-largest bank, rose 15 percent to 807.5 pence. Royal Bank of Scotland, Britain's second-biggest bank before this year's decline of more than 80 percent, rallied 15 percent to 65.5 pence.
Old Mutual
Old Mutual led gains among insurers as the FTSE 350 Life Insurance Index climbed 10 percent, rebounding from five-days of declines.
The insurer and asset manager that makes most of its earnings in South Africa jumped 27 percent to 49.4 pence. Aviva, which yesterday said its capital reserves are ``very strong,'' surged 19 percent to 308 pence. Prudential Plc gained 8.9 percent to 270.25 pence.
The London-based Times today reported the U.K. Financial Services Authority has set up a team of external lawyers to deal with any crises, restructuring or failure within the insurance industry.
The FSA is also looking at ways to help insurers by easing rules on accounting and capital requirements, the Times said, citing people familiar with the matter.
Oil Stocks
Shell led energy companies higher as crude oil rose for the first time in four days, tracking gains in U.S. and Asian equities, to $64.46 a barrel. Europe's largest oil company increased 6.4 percent to 1,626 pence. BP, the region's second- biggest, advanced 5.3 percent to 485.75 pence.
BHP, the world's largest mining company, jumped 8.4 percent to 913 pence as copper rose for a third day. Rio Tinto Group, the world's third-biggest mining company, surged 7.7 percent to 2,432 pence. Anglo American Plc, the world's No. 2, added 14 percent to 1,300 pence.
The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.
Aquarius Platinum Ltd. (AQP LN) jumped 9.5 pence, or 11 percent, to 97.5 as Deutsche Bank AG upgraded the shares to ``buy'' from ``hold.''
Ferrexpo Plc (FXPO LN) plunged 9.75 pence, or 18 percent, to 43.25 after the producer of iron ore in Ukraine abandoned expansion plans because of a ``significant'' cut in steel demand.
Chief Executive Officer Mike Oppenheimer and Dennis McShane, business development director, quit because of the decision and founder Kostyantin Zhevago will take over the business as CEO.
Hays Plc (HAS LN) climbed 7.5 pence, or 13 percent, to 64.5 after UBS AG upgraded the shares to ``neutral'' from ``sell.''
Managed Support Services Plc (MSS LN) soared 3.62 pence, or 57 percent, to 10 after the U.K. provider of kitchen and catering equipment to commercial and industrial markets said full-year results will exceed forecasts.
RPS Group Plc (RPS LN) gained 5.5 pence, or 3.9 percent, to 145 after Britain's only publicly traded environmental researcher saying full-year results will be in line with forecasts.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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