U.K. Stocks Rise for Fifth Day; Thomas Cook, BHP Billiton Climb

By Adam Haigh

Sept. 10 (Bloomberg) -- U.K. stocks rose for a fifth straight day, led by raw-material producers, on speculation central banks will continue to pursue stimulus measures to revive economic growth.

Thomas Cook Group Plc climbed 2.6 percent as banks sold the 43.9 percent stake in the company once held by Arcandor AG. BHP Billiton Ltd. and Rio Tinto Group led gains among mining shares.

The benchmark FTSE 100 Index rose 9.3, or 0.2 percent, to 5,013.6 as of 8:36 a.m. in London, extending an 11-month high. The FTSE All-Share Index climbed 0.2 percent today and Ireland’s ISEQ Index rose 0.7 percent.

The benchmark measure for U.K. equities has rallied 43 percent since March 3 as earnings at companies from Goldman Sachs Group Inc. to Roche Holdings AG and an unexpected return to growth in the French and German economies boosted global stock markets. The six-month rally has pushed the FTSE 100’s price-to-earnings ratio to 74.3, the most expensive level in seven years, according to data compiled by Bloomberg based on reported profits.

Bank of England policy makers will probably keep pursuing their 175 billion-pound ($289 billion) stimulus program today as the British economy shows signs of lagging behind the global recovery.

The central bank, led by Governor Mervyn King, will reiterate the size of its plan to buy bonds with newly created money, according to all 35 economists in a Bloomberg News survey. Policy makers will also keep the benchmark interest rate at a record low of 0.5 percent, all 60 economists in a separate survey said.

Thomas Cook Gains

Thomas Cook added 2.6 percent to 251.3 pence. Banks began placing the shares with investors yesterday afternoon and the sale has now ended, according to people involved in the sale. The stock sold is likely to be priced at between 240 pence and 245 pence, they said.

The placing is being run by the brokerage arms of Commerzbank AG, Royal Bank of Scotland Group Plc and UBS AG. Commerzbank, RBS and Bayerische Landesbank were among Arcandor creditors who seized the Thomas Cook stake when the German retailer filed for insolvency.

Rio Tinto added 1.5 percent to 2,578 pence. BHP Billiton gained 0.8 percent to 1,677 pence.

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