U.K. Stocks Advance, Led by Energy Producers; BP, Shell Gain

By Sarah Thompson

Nov. 14 (Bloomberg) -- U.K. stocks rallied, led by energy producers, as investors speculated the recent rout in commodity shares is overdone. BP Plc, Europe's second-largest oil company, and Anglo American Plc gained.

The benchmark FTSE 100 Index added 150.38, or 3.6 percent, to 4,319.59 at 12:25 p.m., trimming its decline this week to 1 percent. The FTSE All-Share Index increased 3.4 percent today and Ireland's ISEQ Index rose 1.6 percent.

Europe's Stoxx 600 Basic Resources Index closed yesterday valued at 4 times earnings of the companies in the index, compared with 3.8 times profit on Oct. 27, the cheapest on record. The Oil & Gas Index traded at 5.3 times earnings, compared with 5.1 times profit last month.

``Some of the most battered sectors and stocks are coming back sharply, there's a lot of bargain hunting going on,'' said Espen Furnes, an Oslo-based fund manager at Storebrand Asset Management, which has the equivalent of $48 billion. ``If this rally is sustained in the U.S. tonight, it will be a very strong signal that sentiment is turning more positive.''

BP, which has lost 19 percent this year, gained 7.1 percent to 504.25 pence. Royal Dutch Shell Plc, Europe's largest oil company, advanced 6.4 percent to 1,710 pence. The stock has fallen 19 percent in 2008.

BP was valued at 4.4 times profit yesterday, 74 percent cheaper than the average this decade, Bloomberg data show. Shell shares traded for 3.9 times the company's reported profit over the past 12 months yesterday, a 51 percent discount to the average weekly price-to-earnings ratio since March 2006, when Bloomberg began compiling the data.

Anglo American, the world's second-largest mining company, jumped 8.8 percent to 1,385 pence. Anglo has slumped 56 percent this year.

Copper rose the most in four days in London, tracking a rebound in equities and as a weaker dollar increased the metal's attraction as an alternative investment.

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

U.K. companies:

To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net.