U.K. Stocks Resume Rally, Led by Rio; Carnival Shares Advance

By Sarah Jones

Sept. 22 (Bloomberg) -- U.K. stocks rose, resuming a six-month rally for the FTSE 100 Index, led by Rio Tinto Group as metal prices climbed and the world’s third-largest mining company sold a unit to pay down debt.

Rio Tinto led mining shares higher as copper and gold rallied in London. Carnival Plc surged more than 4 percent as Bank of America Corp. added the world’s biggest cruise- line operator to its “Europe 1” list. The bank also raised its 12-month price estimate for Marks & Spencer Plc, sending the retailer’s shares up by more than 2 percent.

The benchmark FTSE 100 gained 1 percent to 5,182.89 at 12:23 p.m. in London, climbing for the 11th time in 13 days. The FTSE All-Share Index rose 0.9 percent and Ireland’s ISEQ Index added 1.2 percent.

“Today’s recovery shows that sentiment still looks to be positive amongst investors,” said Philip Gillet, a London-based sales trader at IG Index. “As has so often been the case over recent months, it is a mining-led rally so far today.”

The FTSE 100 has rebound 48 percent since March 3 as companies reported earnings that beat estimates and economic releases added to evidence that the worst of a global recession may be over.

Rio Tinto climbed 4.3 percent to 2,757 pence, leading mining shares higher as copper rallied on the London metal Exchange and the company agreed to sell its Alcan Composites unit to Schweiter Technologies AG for $349 million to help reduce debt.

Vedanta Resources

Vedanta Resources Plc advanced 3.5 percent to 2,007 pence, while Lonmin Plc increased 4.1 percent to 1,768 pence, rebounding from three days of losses.

Fresnillo Plc, the world’s largest silver producer, increased 5 percent to 791.5 pence and Randgold Resources Ltd. gained 3 percent to 4,558 pence.

Gold snapped a three-day sell off, as a sliding dollar boosted demand for the precious metal as an alternative investment. Silver also advanced in London.

Highland Gold Mining Ltd. gained 7.6 percent to 78.25 pence as the company part-owned by Russian billionaire Roman Abramovich posted a 70 percent rise in first-half profit on increased output of the metal.

Carnival added 4.2 percent to 2,147 pence as Bank of America added the company to its “Europe 1” list. The list includes a collection of stock recommendations from analysts that are believed to “deliver significant positive price appreciation.”

Marks & Spencer

Marks & Spencer climbed 2.7 percent to 384.6 pence as Bank of America raised its 12-month price target for the U.K.’s largest clothing retailer by 9.8 percent to 450 pence. Analysts cited recent trading statements from rival retailers.

“Next Plc and Debenhams Plc have given us more conviction in our thesis that gross margins in the clothing sector are benefiting from a combination of a soft sourcing environment and from tight inventory control,” Bank of America wrote in a note to clients.

The bank also raised its full-year earnings-per-share estimate for the retailer by 11 percent in 2010 and 7 percent in 2011.

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

Avanti Communications Group Plc (AVN LN) jumped 57 pence, or 16 percent, to 412 after the U.K. satellite broadband provider posted its first full-year profit.

Net income in the year ended June 30 was 1.05 million pounds, compared with a loss of 994,000 pounds a year earlier.

Independent News & Media Plc (INM ID) increased 1.5 euro cents, or 5.7 percent, to 28 cents in Dublin, recovering some of yesterday’s 15 percent selloff.

The publisher of the Independent newspaper’s board is considering a plan to cut the group’s debts after nearing agreement on terms with creditors, the Financial Times reported.

Minerva Plc (MNR LN) surged 6.75 pence, or 21 percent, to 39.25 after the developer of two of London’s largest office projects negotiated new terms for 812 million pounds of debt, leaving it without repayments until after June 2011.

Misys Plc (MSY LN) added 6.6 pence, or 3.4 percent, to 202.3 after UBS AG upgraded the software maker to “buy” from “neutral,” saying the share’s recent “underperformance” offers an opportunity.

Shire Plc (SHP LN) increased 25 pence, or 2.3 percent, to 1,094 as Jefferies International Ltd. raised its recommendation for the maker of the Adderall hyperactivity drug to “hold” from “underperform,” citing “impressive” earnings growth forecasts.

Trinity Mirror Plc (TNI LN) lost 6.7 pence, or 4.2 percent, to 153.3. Royal Bank of Scotland Group Plc downgraded the newspaper publisher to “sell” from “hold,” saying the share price discounts a recovery, which may be more “muted” than expected.

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