U.K. Stocks Climb as Mining Shares Gain; Antofagasta Advances

By Sarah Jones

Aug. 20 (Bloomberg) -- U.K. stocks advanced for a third day, led by a rally in commodity producers as base metals rebounded in London.

Antofagasta Plc, Kazakhmys Plc and Xstrata Plc climbed more than 3 percent as copper rallied. Rio Tinto Group, the world’s third-largest mining company, added 1.4 percent even as profit fell. Royal Dutch Shell Plc led energy shares higher as crude oil traded near a two-month high.

The FTSE 100 Index added 60.27, or 1.3 percent, to 4,749.94 at 12:21 p.m. in London, as all but three stocks advanced. The FTSE All-Share Index increased 1.3 percent today, while Ireland’s ISEQ Index surged 1.6 percent.

“Mining shares are enjoying another day of decent gains,” said Tim Hughes, London-head of sales trading at IG Index. “Investors still seem to have the view that there is more to come from this sector and dips are treated as opportunities to buy in.”

The FTSE 100 has rebounded 35 percent since March 3, led by a rally in mining and bank shares amid optimism the worst global recession since World War II is easing. The measure is trading at 59.9 times the earnings of its companies, near the highest level since September 2002, according to Bloomberg data.

U.K. retail sales increased for a second month in July as shoppers bought more furniture and electrical goods, a sign consumer spending is reviving as the recession eases.

Antofagasta

Antofagasta led mining shares higher as copper advanced from a two-week low in London. Lead, nickel, tin and zinc also gained on the London Metal Exchange. The owner of copper mines in Chile climbed 3.6 percent to 744 pence.

Kazakhmys, Kazakhstan’s biggest copper producer, increased 3.1 percent to 905.5 pence and Xstrata, the world’s fourth- largest copper producer, jumped 5 percent to 810 pence.

Rio Tinto added 1.4 percent to 2,344.5 pence even after first-half profit dropped 65 percent to $2.5 billion. Underlying earnings, which exclude some one-time items, were $2.6 billion, missing the $2.73 billion median estimate of seven analysts surveyed by Bloomberg News. The mining company also said it may pay a final dividend for 2009.

Shell, Europe’s largest oil company, increased 1.4 percent to 1,609.5 pence as oil traded near the highest since June after U.S. inventories of crude declined the most in 15 months, signaling a rebound in demand.

BP Plc, the region’s second-biggest oil company, added 1.3 percent to 516 pence, while BG Group Plc, U.K.’s third-largest natural gas producer, increased 1.7 percent to 1,043 pence.

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

Premier Foods Plc (PFD LN) gained 1.36 pence, or 3.2 percent, to 44. The maker of Mr. Kipling cakes granted consent for Warburg Pincus LLC to buy up to 2 percent more of its shares.

SIG Plc (SHI LN) rallied 9.5 pence, or 7.6 percent, to 134.4 after Europe’s largest supplier of insulation and roofing extended a cost cutting program and forecast a turnaround in its markets next year.

SIG eliminated 553 jobs and closed 17 more branches since the end of June. That brought annual savings since its cost reductions started in 2008 to a net 92 million pounds ($131 million), beating a previous target of 74 million pounds.

Wellstream Holdings Plc (WSM LN) slid 51.1 pence, or 9.5 percent, to 485.9. The maker of oil and natural-gas pipelines said first-half net income fell 40 percent to 16.8 million pounds because of lower prices and production delays at its Newcastle factory. The company said “challenging” market conditions point to second-half earnings that will only be “slightly ahead” of results achieved in the first six months of the year.

To contact the reporters on this story: Sarah Jones in London at sjones35@bloomberg.net