U.K. Stocks Rise, Led by Energy Producers; BP, BHP Lead Gains

By Sarah Thompson

Nov. 24 (Bloomberg) -- U.K. stocks gained for the first time in four days, led by oil and mining companies, as investors speculated the recent rout has left shares trading at attractive valuations.

BP Plc, Europe's second-largest oil company, and BHP Billiton Ltd. rose at least 2.8 percent. British Land Co. Plc, London's largest office landlord, and WH Smith Plc increased after brokers recommended buying the shares.

The benchmark FTSE 100 Index added 107.43, or 2.9 percent, to 3,888.39 at 9:06 a.m. in London, having lost 11 percent last week. The FTSE All-Share Index rose 2.7 percent and Ireland's ISEQ Index jumped 3.6 percent. The S&P 500, which capped a third- straight weekly decline, surged 6.3 percent to 800.03 Friday.

The FTSE 350 Oil & Gas Producers Index traded last week at 4.35 times its companies' reported earnings, the cheapest valuation since Bloomberg began tracking the data in April 1999.

``U.K. investors are more positive following the buoyant New York close Friday and are buying into those sectors which have been hit the hardest,'' said Martin Slaney, head of derivatives at GFT Global Markets in London. ``Broker upgrades are also giving the market a rosier hue.''

BP added 2.8 percent to 475. BHP, the world's largest mining company, jumped 4.9 percent to 836.5 pence.

British Land increased 2.2 percent to 473 pence after it was upgraded to ``buy'' from ``hold'' at Citigroup Inc., which cited ``some of the most resilient cash flows in the sector,'' and ``encouraging progress on letting up the developments.''

WH Smith climbed 2.3 percent to 331 pence. The U.K.'s largest magazine retailer was raised to ``buy'' from ``neutral'' at Merrill Lynch & Co., which cited an ``attractive'' valuation.

``We do not think our forecasts are aggressive and we think the market is overestimating the downside risk from falling airport passenger numbers,'' the analysts, including Jonathan Hogan, wrote in a research note dated today.

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

U.K. companies:

Homeserve Plc (HSV LN) slumped 226 pence, or 19 percent, to 993. The U.K. repair-service provider that sells insurance in Homebase stores said a global economic slowdown may reduce full- year profit as customers buy less home emergency repair insurance coverage.

Mitie Group Plc (MTO LN) climbed 1.5 pence, or 0.9 percent, to 170.5. The services company that provides security guards to all of the courts in England and Wales said first-half profit rose 18 percent after winning airport and state-housing maintenance orders.

Standard Chartered Plc (STAN LN) lost 26 pence, or 3.4 percent, to 733.5. The third-biggest U.K. bank plans to raise 1.8 billion pounds ($2.7 billion) in a rights offer to bolster its finances as the global economic recession deepens.

Tesco Plc (TSCO LN) added 2.5 pence, or 0.9 percent, to 288.4. Britain's largest retailer advocated a 300 million-pound ($446 million) tax break for U.K. retailers from scrapping an increase in business taxes planned for next year, the Financial Times reported.

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