U.K. Stocks Rise, Trimming Weekly Loss on FTSE 100 Index to 8%

By Adam Haigh

Nov. 21 (Bloomberg) -- U.K. stocks climbed, trimming this week's decline on the benchmark FTSE 100 Index to less than 8 percent, as commodity stocks rallied and the measure traded at the cheapest relative to earnings in at least 15 years.

BHP Billiton Ltd. gained 8.7 percent and Rio Tinto Group added 6.1 percent. DSG International Plc rallied 35 percent as Credit Suisse Group AG recommended buying the shares. Bank of Ireland Plc soared 19 percent in Dublin after saying it had received approaches from a number of parties interested in investing in the country's biggest lender, pushing Ireland's ISEQ Index 3.1 percent higher.

The benchmark FTSE 100 Index gained 34.11, or 0.9 percent, to 3,909.10 at 12:08 p.m. in London. The measure is down 7.6 percent this week, closing yesterday at 6.9 times estimated earnings, according to Bloomberg data. The FTSE All-Share Index added 1 percent.

``These are going to be great entry points'' for commodity shares, said Evy Hambro, who runs the $5 billion BlackRock Investment Management Ltd. World Mining Fund. ``There are fantastic opportunities today.'' BHP Billiton closed yesterday at 4.05 times estimated earnings, a record low.

More than $2 trillion has been wiped off the value of U.K. shares this year as writedowns and credit losses at financial across the world erode profits.

BHP Billiton, the world's biggest mining company, added 8.7 percent to 818 pence and Rio Tinto, the third-biggest miner, gained 6.1 percent to 2,145 pence.

DSG International jumped 35 percent to 14.5 pence, the steepest advance since at least 1988. Credit Suisse upgraded the U.K.'s largest consumer-electronics retailer to ``outperform'' from ``underperform.''

``The risk of a near-term financial failure is in our view being over-discounted by the market and we believe management will reassure on its financial position'' next week, Credit Suisse analyst Assad Malic wrote in a research note today.

Bank of Ireland soared 19 percent to 1.199 euros. The Irish Times earlier reported that buyout firms J.C. Flowers & Co. and the Carlyle Group want to buy a stake of as much as 40 percent in the lender, without saying where it got the information.

Fuller Smith & Turner Plc, the largest pub owner in London's financial district, rose 6.7 percent to 337 pence. The company maintained sales growth and cut debt, beating rivals suffering from Britain's slumping economy.

Aer Lingus Group Plc added 8.6 percent to 1.07 euros. The carrier said the Siptu labor union withdrew a strike threat after agreeing to a new cost-cutting program. The union had planned industrial action for Nov. 24 over outsourcing plans. Separately, Goldman Sachs Group Inc. upgraded Ireland's second-biggest airline to ``buy'' from ``neutral.''

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net