U.K. Stocks Gain, Led by Energy Producers and British Airways

By Sarah Thompson

Nov. 7 (Bloomberg) -- U.K. stocks rose for the first time in three days, led by energy producers, as oil and metals prices rallied. BP Plc, Europe's second-largest mining company, and Rio Tinto Group climbed.

British Airways Plc, Europe's third-biggest carrier, jumped the most in seven years after raising its revenue forecast and saying it will trim summer flights and complete a job-cutting program.

The FTSE 100 Index added 59.61, or 1.4 percent, to 4,332.02 at 12.26 p.m. in London, trimming its loss for the week to 1.2 percent. The FTSE All-Share Index increased 1.4 percent today and Ireland's ISEQ Index jumped 2.2 percent.

``Commodity stocks are sending the benchmark index higher,'' said Martin Slaney, head of derivatives at GFT Global Markets in London. ``Oil companies are looking pretty good value at these levels.''

BP added 4.3 percent to 514 pence. Royal Dutch Shell Plc, Europe's largest oil company, gained 2.1 percent to 1,676 pence. BP is valued at 5.1 times profit, 69 percent cheaper than the average this decade, Bloomberg data show. Shell shares trade at 4.4 times the company's reported profit over the past 12 months, a 46 percent discount to the average weekly price-to-earnings ratio since March 2006, when Bloomberg began compiling the data.

Crude rose from a 19-month low in New York as rising stock indexes allayed concern about waning energy demand.

Oil prices may rise next week, according to a Bloomberg News survey of analysts, as traders view the plunge in crude prices to below $60 a barrel as excessive. Equity markets in Europe and U.S. index futures recovered on speculation that interest rate cuts will reverse an economic slowdown.

Rio Tinto Gains

Rio, the world's third-largest mining company, advanced 2.6 percent to 2,570 pence. Anglo American Plc, the second-biggest, added 1.7 percent to 1,348 pence.

Zinc for delivery in three months jumped $31, or 2.8 percent, to $1,129 a ton as of 9:04 a.m. in London and lead rose $31, or 2.1 percent, to $1,490 a ton.

British Airways gained 14 percent to 148.70 pence. The London-based carrier raised its forecast for full-year revenue growth to 4 percent from 3 percent.

It will also reduce its summer schedule by 1 percent to save money as traffic declines. The carrier made the changes as it said fiscal first-half sales rose 6.4 percent to 4.75 billion pounds, beating the average analyst estimate of 4.57 billion pounds. Operating profit also surpassed analysts' estimates.

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

U.K. companies:

EBTM Plc (EBTM LN), a U.K. online retailer of music-related clothing and accessories, will post a first-half operating loss because of ``challenging'' wholesale conditions. The stock slumped 0.63 pence, or 31 percent, to 1.38 pence.

Galliford Try Plc (GFRD LN) decreased 2.75 pence, or 6.8 percent, to 38 pence, The U.K. construction company that's upgrading Wimbledon's Centre Court tennis stadium said it is performing in line with expectations and a write down of 50 million pounds is required.

Hornby Plc (HRN LN) slid 9.5 pence, or 7.2 percent, to 122. The owner of the Airfix model-kit trademark said first-half profit fell 20 percent as customers bought less hobby products and the company incurred costs related to the acquisition of Corgi Classics.

Marks & Spencer Group Plc (MKS LN) was upgraded to ``outperform'' at Sanford C. Bernstein, saying yesterday's interest rate cut by the Bank of England could spark buying in British retail stocks.

Bernstein raised its price estimate for the shares 30 percent to 300 pence. The stock gained 6.25 pence, or 2.5 percent, to 259.

Rentokil Initial Plc (RTO LN) jumped 1.5 pence, or 3.2 percent, to 48.25. The world's largest pest-control provider said it has stemmed a decline in sales at a European washroom-services business and the company maintained full-year profit forecasts.

Robert Wiseman Dairies Plc (RWD LN) decreased 51 pence, or 14 percent, to 325. Scotland's largest provider of fresh milk reported a first-half loss after the company paid a one-time tax charge and stronger oil prices led to increased expenses.

To contact the reporters on this story: Andrew MacAskill in London at amacaskill@bloomberg.netSarah Thompson in London at sthompson17@bloomberg.net.