U.K. Stocks Rise for First Time in Eight Days; Royal Bank Gains

By Adam Haigh

Jan. 16 (Bloomberg) -- U.K. stocks rose for the first time in eight days after the U.S. government announced further plans to prop up the ailing banking system and rising commodity prices triggered a rally in oil and metals producers.

Royal Bank of Scotland Plc soared 8 percent after Bank of America Corp., the largest U.S. bank by assets, received $138 billion to prevent the global financial crisis from deepening. HSBC Holdings Plc gained 1.2 percent as Dresdner Kleinwort advised clients to buy shares of Europe’s biggest bank. Royal Dutch Shell Plc and Anglo American Plc added more than 3 percent.

The benchmark FTSE 100 Index climbed 113.94 points, or 2.8 percent, to 4,235.05 at 12:11 p.m. in London. The gauge looks set to end its longest losing streak in more than four years as it pares this week’s decline to 4.8 percent. The measure is trading at 7.45 times reported earnings, close to the low of 6.43 times profits on Nov. 21.

“It looks like we are going to finish the week on a fairly positive note,” said Tom Hougaard, chief market strategist at City Index Ltd. in London. “There is going to be some bargain hunting going into the weekend.”

The FTSE All-Share Index added 2.6 percent today and Ireland’s ISEQ Index gained 0.9 percent.

Royal Bank added 8 percent to 43.1 pence. The U.S. government agreed to invest $20 billion more in Bank of America and guarantee $118 billion of assets “as part of its commitment to support financial-market stability,” the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. said in a joint statement shortly after midnight in Washington.

HSBC Rises

HSBC added 1.2 percent to 554 pence as Dresdner raised its recommendation on the stock to “buy” from “hold,” saying a dividend cut is already “fully discounted” in the share price. The shares had tumbled 15 percent in the past two days as Morgan Stanley speculated the bank may have to trim its dividend and raise capital.

Shell, Europe’s largest oil producer, climbed 3.4 percent to 1,725 pence. Crude oil rose for the first time in three days.

Anglo American, which controls the world’s biggest platinum producer, added 7.9 percent to 1,376 pence as platinum increased. Copper, lead and nickel also advanced.

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

Dori Media Group Ltd. (DMG LN) declined 37.5 pence, or 45 percent, to 45 after the Tel Aviv-based soap-opera producer said sales slowed in the fourth quarter on “increased caution” from program buyers.

Eidos Plc (EID LN) soared 3 pence, or 25 percent, to 15 after the maker of the “Tomb Raider” video game said it got a preliminary approach from an unidentified party which may or may not lead to an offer being made for the company.

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