U.K. Stocks Climb for Fourth Day; Mining Shares, Tullow Rally

By Sarah Jones

Sept. 16 (Bloomberg) -- U.K. stocks advanced for a fourth day, led by commodity producers as mining shares climbed higher with metal prices and on reports Tullow Oil Plc may have established a new oilfield.

Xstrata Plc, Kazakhmys Plc and Rio Tinto Group each rallied more than 2 percent as copper rose for a second day and as analysts at CLSA Research Ltd. said commodity demand in China, the largest metals user, “is back on track in a very big way.” Shares of Tullow Oil jumped 4.2 percent. Next Plc gained 2.4 percent after the retailer said it expects analysts to raise full-year profit estimates.

The benchmark FTSE 100 climbed 49.32, or 1 percent, to 5,091.45 at 9:13 a.m. in London, the highest in almost a year. The FTSE All-Share Index rose 0.9 percent today, while Ireland’s ISEQ Index gained 0.5 percent.

The FTSE 100 has rebounded 45 percent since March lows, leaving the measure’s valuation at about 76 times its companies’ reported earnings, the most expensive level in seven years, according to data compiled by Bloomberg.

Stocks in Europe and Asia and U.S. futures also advanced today as billionaire investor Warren Buffett said his company is buying equities.

“Equity markets are once again finding a reason to extend the recent run of gains,” said Ben Potter, a research analyst at IG Markets in Melbourne. “The rally seems to be finding traction on a global basis.”

Xstrata

Shares of Xstrata rallied 3.6 percent to 981.5 pence. Copper led gains on the London Metal Exchange. The world’s fourth-largest copper producer was also upgraded to “buy” from “hold” at Royal Bank of Scotland Group Plc.

Kazakhmys, Kazakhstan’s biggest copper producer, advanced 2.6 percent to 1,126 pence. Rio Tinto, the world’s third-largest mining company, climbed 2.9 percent to 2,724 pence.

Commodity demand in China, the largest metals user, “is back on track in a very big way,” and copper and coking coal have the best prospects for price gains as the world economy accelerates, according to CLSA Research Ltd.

Tullow Oil, a London-based explorer with most licenses in Africa, jumped 4.2 percent to 1,133 pence. The Financial Times reported the company may announce with Anadarko Petroleum Corp. the establishment of a new oilfield along the West African coast from Ghana to Sierra Leone. The newspaper cited people familiar with the situation.

Next led a rally in retail shares, climbing 2.4 percent to 1,740 pence. The U.K.’s second-biggest seller of clothing said it is raising its forecast for profitability because of tighter control over inventory levels and expenses.

The company said it expects analysts to raise forecasts for a second time in two months after a stronger-than- expected first-half performance.

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