U.K.’s FTSE 100 Index Gains; Tesco, RBS and Vedanta Advance

By Sarah Jones and Alexis Xydias

Dec. 2 (Bloomberg) -- The U.K.’s FTSE 100 Index advanced, led by Tesco Plc after Britain’s biggest supermarket company reported third-quarter sales growth that beat analysts’ estimates.

Royal Bank of Scotland Group Plc gained as Merrill Lynch & Co. advised buying the stock. Vedanta Resources Plc, the mining company controlled by billionaire Anil Agarwal, climbed after saying it will buy back as much as 10 percent of its shares.

The benchmark FTSE 100 added 23.61, or 0.6 percent, to 4,089.10 at 11:32 a.m., after earlier falling as much as 2.3 percent. The FTSE All-Share Index rose 0.6 percent and Ireland’s ISEQ Index climbed 0.6 percent.

The FTSE 100 has fallen 37 percent this year, as banks had to be rescued by the government and an economic slowdown hurt consumers. The losses have left the British benchmark trading at the lowest prices since at least 1993, according to Bloomberg data.

“The market is oversold,” said Hugues Rialan, investment director at Groupe Robeco Gestion in Paris. “Immobility is not a good option.”

Tesco rallied 8.4 percent to 312.2 pence, the steepest jump since 2002. The company reported third-quarter sales growth that beat analysts’ estimates after the retailer introduced a cheaper product range to combat discounters Aldi Group and Lidl.

Sales, excluding gasoline, climbed 2 percent at U.K. stores open at least a year, beating the 1.6 percent median estimate of 10 analysts surveyed by Bloomberg.

RBS rose 5.3 percent to 57.7 pence. The shares were rated “buy” in resumed coverage at Merrill Lynch, which said RBS may sell U.S. retail arm Citizens Financial Group to buy back preference shares from the government.

Vedanta added 12 percent to 575.5 pence. The mining company will buy back as much as 10 percent of its stock for up to $250 million. The London-based company has $5 billion in cash, it said today in a statement.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net; Alexis Xydias in London at axydias@bloomberg.net.