U.K. Stocks Rise, Paced by BHP; HSBC Leads Bank Shares Higher

By Sarah Thompson

Nov. 25 (Bloomberg) -- U.K. stocks advanced, paced by BHP Billiton Ltd. after the world’s largest mining company withdrew its $66 billion bid for Rio Tinto Group.

HSBC Holdings Plc, Europe’s biggest bank, led banking shares higher after Citigroup Inc. said it had no need to sell assets to shore up capital following a $20 billion government cash injection.

The benchmark FTSE 100 Index gained 44.90, or 1.1 percent, to 4,197.86 at 11:31 a.m. in London, extending yesterday’s record advance. The FTSE All-Share Index increased 1.1 percent and Ireland’s ISEQ Index climbed 1.5 percent.

“The banks are doing well all over Europe today and not just in the U.K. thanks to continued relief over the Citigroup rescue,” said Espen Furnes, an Oslo-based fund manager at Storebrand Asset Management, which has the equivalent of $48 billion. “BHP was right to withdraw, this is not the time to pursue such large acquisitions,”

BHP increased 16 percent to 1,138 pence, extending yesterday’s 23 percent gain. Rio Tinto, the world’s third-largest mining company, fell 36 percent to 1,573 pence, the biggest drop in at least 20 years. BHP Chief Executive Officer Marius Kloppers said buying Rio would have increased his company’s debt and it would have been difficult to sell assets.

HSBC advanced 2.2 percent to 664.25 pence. Barclays Plc, the U.K.’s second-biggest bank, rose 6.6 percent to 156.2 pence. HBOS Plc, the bank being bought by Lloyds TSB Group Plc through a government-brokered takeover, added 7 percent to 92 pence.

Hold Onto Assets

Citigroup’s Chief Financial Officer Gary Crittenden said the U.S. bank will hold onto assets in emerging markets as it focuses on faster-growing regions.

Citigroup received $306 billion of guarantees yesterday for troubled mortgages and toxic assets from the U.S. government to stabilize the New York-based bank, which has $2 trillion of assets and operations in more than 100 countries.

Wolseley Plc, the world’s biggest distributor of plumbing gear, retreated 4.3 percent to 286.5 pence after being cut to “sell’ from “neutral” at Royal Bank of Scotland Group Plc. Wolseley will probably need to raise 750 million pounds ($1.13 billion) through a share sale to remove the risk it would breach debt covenants, analysts including John Messenger wrote in a note today.

BT Group Plc decreased 1.6 percent to 133.1 pence after being downgraded to “neutral” from “buy” at Merrill Lynch & Co., which said the U.K.’s largest phone company will feel the effects of a slowdown in corporate and consumer spending next year.

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

U.K. companies:

EasyJet Plc (EZJ LN) lost 5.25 pence, or 2 percent, to 260.75. Europe’s second-biggest discount airline was cut to “equal-weight” from “overweight” at Morgan Stanley, which said “the very public uncertainty over EasyJet’s future strategy has fogged the investment case for the stock.”

JJB Sports Plc (JJB LN) climbed 2.5 pence, or 7.7 percent, to 35. JD Sports Fashions Plc (JD/ LN), the U.K.’s third-largest sporting-goods retailer, said it bought a 10.02 percent stake in larger competitor JJB Sports for more than 8 million pounds.

SSL International Plc (SSL LN) gained 24.25 pence, or 5.8 percent, to 445. The maker of Durex condoms and Scholl shoes returned to profit in the first half, boosted by condom sales in China and Russia.

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