U.K. Stocks Gain as Mining Shares Rise; National Express Jumps

By Sarah Jones

Oct. 19 (Bloomberg) -- U.K. stocks advanced, as higher commodity prices boosted the earnings prospects for mining companies and National Express Plc received a 1.7 billion-pound ($2.8 billion) takeover offer.

Anglo American Plc and Vedanta Resources Plc rose at least 2.5 percent as copper rebounded in Asia. National Express jumped 9.6 percent after the British rail operator said it received a “highly preliminary” proposal from Stagecoach Group Plc. William Hill Plc surged 8.4 percent after reporting higher online sports betting sales.

The benchmark FTSE 100 rallied 56.93, or 1.1 percent, to 5,247.17 at 10.28 a.m. in London, advancing for the first time in three days. The FTSE All-Share Index gained 1 percent, while Ireland’s ISEQ Index slid 0.1 percent.

“Rising commodity prices are helping to lift the heavyweight miners and energy stocks,” said London-based Joshua Raymond, a market strategist at City Index. “Investors are using Friday’s losses as another buying opportunity.”

The FTSE 100 has rebound 49 percent since March 3 as companies report better-than-expected earnings and investors speculate the worst of the global recession has passed. Today marks the 22nd anniversary of “Black Monday,” when an increase in U.S. interest rates and slowing economic growth sparked a slump that sent the Dow Jones Industrial Average tumbling more than 20 percent in one day.

Ernst & Young LLP’s Item Club today said the U.K. economy will grow twice as fast as previously expected next year as the country pulls out of the worst recession in a generation.

Anglo American Climbs

Gross domestic product will increase 1 percent in 2010, compared with a 0.5 percent forecast in July, the researchers, who use the same model as the U.K. Treasury, said in a statement in London.

Anglo American climbed 2.8 percent to 2,262 pence as copper rebounded amid speculation a report in China will show economic growth in the world’s largest metals consumer accelerated in the third quarter. Vedanta Resources Plc added 2.5 percent to 2,370 pence, and Lonmin Plc increased 2.8 percent to 1,735 pence. Lead, nickel and zinc also climbed on the London Metal Exchange.

Hochschild Mining Plc rallied 2.3 percent to 320.3 pence. BofA Merrill Lynch Global Research raised its recommendation for Peru’s second-largest silver miner raised to “buy,” as the bank raised its long term gold and silver price estimates.

Royal Dutch Shell Plc, Europe’s largest oil company, increased 2 percent to 1,896 pence and BP Plc, the second- biggest, added 1.3 percent to 566.3 pence. Crude added as much as 0.7 percent to $79.05 in New York.

‘Highly Preliminary’

National Express climbed 9.6 percent to 396.6 pence. The company said it received a “highly preliminary” proposal from Stagecoach for an all-share transaction in which National Express shareholders would hold no more than 40 percent of the enlarged group.

The company will “carefully consider” the proposal while continuing to progress with its plans for an equity fund raising, it said yesterday.

National Express tumbled 23 percent on Oct. 16 after CVC Capital Partners Ltd. scrapped a 765 million-pound bid for National Express.

Stagecoach lost 1.9 percent to 154 pence, extending last week’s 6.5 percent decline.

William Hill climbed 8.4 percent to 174.6 pence. The U.K.’s second- biggest bookmaker rose the most since January as its third-quarter performance bettered that of competitor Ladbrokes Plc.

Fiscal third-quarter net revenue dropped 3 percent, which compares with a 15 percent decline at Ladbrokes. Both companies were hurt as fewer soccer games were tied than in previous seasons, a development that favored betters. Online sports betting sales rose 40 percent in its fiscal third quarter.

-- Editors: Roger Neill.

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