U.K. Stocks Advance; BP, Xstrata, Diageo Shares Lead the Gains

By Adam Haigh

Nov. 18 (Bloomberg) -- U.K. stocks advanced as a three-day rally in crude oil and rising metals prices buoyed commodities producers and Societe Generale recommended buying Diageo Plc.

BP Plc and Royal Dutch Shell Plc, Europe’s largest energy producers, climbed as oil advanced to $79.85 a barrel. Xstrata Plc led a rally in mining companies. Diageo, the world’s biggest liquor maker, added 1.7 percent after Societe Generale raised its recommendation to “buy” on a rebound in volumes in the U.S. market.

The benchmark FTSE 100 Index gained 10.98, or 0.2 percent, to 5,356.91 as of 10:02 a.m. in London. The gauge has rebounded 53 percent from this year’s low on March 3 amid signs government stimulus policies and record-low interest rates are helping to drag the global economy out of recession. The FTSE All-Share Index added 0.2 percent today and Ireland’s ISEQ Index lost 0.1 percent.

“The rally seems to be holding up though clients are getting a little wary at the moment as we approach 5,400 on the FTSE 100,” said Paul Chesterton, a senior sales trader at CMC Markets Plc in London. “Clients are sticking with positions but are a bit reluctant to keep buying at ever higher levels.”

Bank of England policy makers were split three ways in a vote to extend the bond-purchase program to 200 billion pounds ($336 billion), and discussed lowering the deposit rate on bank reserves to encourage lending.

While the majority of the nine-member Monetary Policy Committee wanted a 25 billion-pound increase, Chief Economist Spencer Dale favored no change and David Miles sought a 40 billion-pound expansion, minutes of the Nov. 5 meeting published in London today showed. They unanimously kept the benchmark interest rate at 0.5 percent.

Oil Advances

BP gained 0.7 percent to 591.6 pence. Shell added 0.7 percent to 1,884.5 pence. The companies account for about 16 percent of the benchmark index by market weighting.

Oil advanced for a third day in New York after an industry report showed a decline in crude stockpiles in the U.S., the largest energy consumer.

Xstrata, the world’s largest exporter of coal used by power stations, climbed 3 percent to 1,107 pence. BHP Billiton Ltd., the biggest mining company, rose 2 percent to 1,885 pence. Copper, lead, nickel and tin climbed on the London Metal Exchange.

Diageo added 1.7 percent to 1,050 pence. Societe Generale raised its recommendation to “buy” from “hold.”

Cadbury Plc increased 1.2 percent to 797.5 pence. Hershey Co. has been in talks with Ferrero SpA for weeks about making a joint bid for Cadbury, the Wall Street Journal reported yesterday, citing unidentified people familiar with the discussions.

Ladbrokes Advances

Ferrero may be divided about making a bid for Cadbury or a tie-up with the U.K. confectioner, the London-based Times reported, without attribution.

Ladbrokes Plc rose 3.3 percent to 131.2 pence. The owner of more than 2,300 U.K. and Irish betting shops was upgraded to “buy” from “underperform” at BofA Merrill Lynch Global Research, with a new price estimate of 160 pence.

Wolseley Plc dropped 2.3 percent to 1,341 pence. The world’s largest supplier of heating and plumbing gear said profit before exceptional items slumped 45 percent and sales from continued operations fell 13 percent in the three months ended Oct. 31.

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