U.K. Stocks Advance, Led by BP and BG Group; Irish Banks Jump

By Alexis Xydias

Dec. 15 (Bloomberg) -- The U.K.’s FTSE 100 Index advanced, extending a 5.7 percent gain last week, as energy companies followed oil prices higher. BP Plc and BG Group Plc climbed.

Bank of Ireland Plc and Anglo Irish Bank Corp. lifted the ISEQ Overall Index after the Irish government said it may lead a 10 billion-euros ($13.4 billion) bailout of banks.

The FTSE 100 increased 21.18, or 0.5 percent, to 4,301.53 as of 12:35 p.m. in London. The FTSE All-Share Index added 0.5 percent. Ireland’s ISEQ gained 1.9 percent.

The benchmark FTSE 100 has crept up 14 percent since reaching its 2008 low on Nov. 21, as investors snapped shares trading at their lowest relative to earnings since at least 1999. The measure is still down 33 percent this year.

Stocks “discounted an extremely deep recession,” said Stephen Thornber, who helps manage $1 billion in global equities at Threadneedle Asset Management Ltd. in London. “While equities look attractive value, sentiment will wax and wane and we have a year-end effect that could turn negative in” 2009.

BP, Europe’s second-largest oil company, increased 1.9 percent to 526 pence. BG Group, the third-biggest U.K. oil and gas producer, gained 3.7 percent to 985.5 pence.

Crude oil for January delivery rose $2.29, or 5 percent, to $48.57 a barrel in electronic trading on the New York Mercantile Exchange after OPEC’s Secretary-General Abdalla El-Badri said the group needs to make a “sizeable” production cut at this week’s meeting in Algeria.

Bank of Ireland Surges

Bank of Ireland, the country’s largest bank by assets, surged 14 percent to 1 euro. Anglo Irish, the country’s third- biggest lender, rose 14 percent to 43 cents.

Ireland’s government wants shareholders and private investors to support a recapitalization of banks and it will use money from the 18.7 billion-euro state pension fund to invest, the finance ministry in Dublin said late yesterday. The state may buy preference shares and ordinary shares or underwrite a share issue.

HSBC Holdings Plc fell 2.3 percent to 716.5. Europe’s largest bank may have about $1 billion at stake in the collapsed venture of Bernard Madoff, the Financial Times said, citing people close to the situation.

The following stocks also rose or fell in U.K. and Irish markets. Stock symbols are in parentheses:

British Land Co. Plc (BLND LN) rose 30.5 pence, or 5.9 percent, to 551.5. Land Securities Plc (LAND LN) added 26 pence, or 2.8 percent, to 946.5. The two companies led U.K. commercial- property stocks higher after Jones Lang LaSalle Inc. said acquisition targets are the most attractive since the early 1990s.

Drax Group Plc (DRX LN), the U.K. owner of western Europe’s biggest coal-fired power plant, fell 35.5 pence, or 6.6 percent, to 505. The stock was cut to “underperform” from “buy” at Merrill Lynch & Co., which cited concern over the company’s profit margin.

Imperial Energy Plc. (IEC LN) fell 35 pence, or 3.4 percent, to 990. The Siberian oil producer listed in London dropped after the Economic Times of India reported that India’s Oil & Natural Gas Corp. may only buy a 51 percent stake in the company.

Inchcape Plc (INCH LN) plummeted 19 pence, or 27 percent, to 51.75, the worst performer in Europe’s Dow Jones Stoxx 600 Index. The operator of car dealerships said 2009 results are likely to be “significantly below our previous expectations.”

Premier Foods Plc (PFD LN) added 1 penny, or 3.8 percent, to 27.25 pence. The second-largest U.K. bread baker said it’s holding preliminary talks with “a number of investors and other parties” that may make an investment in the company.

Wichford Plc (WICH LN) plunged 5.75 pence, or 13 percent, to 39.25. The U.K. landlord that leases offices to the British and German governments said its full-year loss widened to 130.4 million pounds from 9.8 million pounds a year earlier.

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net