MW: Miners, oil producers lead gains for British shares
FTSE 100 index up 1.5%; Cadbury in focus ahead of bid deadline
By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- London shares climbed on Monday, with commodity-sector stocks among the strongest performers as the dollar weakened following the weekend's G20 meeting.
The U.K. FTSE 100 index (UK:UKX 5,213, +69.88, +1.36%) rose 1.5%, or 75.43 points, to 5,218.79, up for the fourth straight session and above the Oct. 27 close of 5,200.97.
Other European shares were also higher, as were U.S. stock futures. See Europe Markets.
BP (UK:BP. 594.00, +10.10, +1.73%) (BP 59.85, +1.42, +2.43%) , up 2%, Rio Tinto (UK:RIO 3,031, +114.00, +3.91%) (RTP 203.16, +9.83, +5.09%) , up 4.3%, and Xstrata (UK:XTA 1,000, +35.78, +3.72%) , up 3.9%, were helping the top index to gain ground.
The gains came as metal futures advanced, with gold futures up $13.50 at $1,109.30 an ounce and oil futures up $1.36 at $78.79 a barrel. Gold futures hit a new high in electronic trading on Monday as the dollar weakened. Read more on metals. Read more on dollar.
At the Group of 20 meeting over the weekend, finance ministers and central bankers from the world's 20 most powerful economies agreed to keep massive stimulus measures in place until the global economic recovery strengthens. Read more on G20.
Strategists at Citigroup said that markets may be somewhat surprised by the speed with which G20 authorities look to be putting into place a growth framework. "We believe this [to be] a marginal positive for risk appetite and as such a negative factor for the U.S. dollar," they said.
Insurance firms were also performing well, with Prudential (UK:PRU 607.50, +29.50, +5.10%) (PUK 19.19, +0.22, +1.16%) shares up 5.5%.
The firm has a strong presence in emerging Asian markets. "Some of the world's developing markets are doing exactly what it says on the tin and growing," said analysts at ING in a note on the insurance sector.
Also, deal speculation in the sector centered on Asia on Monday after Axa Asia Pacific Holdings rejected a $10.2 billion joint offer from AMP Ltd. and Axa Group. See full story.
Staying with potential deals and shares of chocolate maker Cadbury (UK:CBRY 767.50, +9.50, +1.25%) (CBY 50.50, +0.63, +1.26%) rose 1.1% to 766 pence amid speculation that Kraft Foods (KFT 26.78, -0.25, -0.92%) may make formal an indicative cash-and-shares offer.
The initial bid, which Cadbury rejected, was recently valued at 720 pence as Kraft's stock price has dipped. Kraft has until 5 p.m. London time to make a formal offer or back off for six months.
Shares of pharmaceutical giant AstraZeneca (UK:AZN 2,716, +19.50, +0.72%) (AZN 45.66, +0.68, +1.51%) were up 1% at 2,723 pence.
The firm was downgraded to underweight from neutral at J.P. Morgan, which said the company has a strong track record of beating estimates, but this will get tougher in coming quarters as it has to digest generic competition of high-margin products.
However, RBS analysts upgraded the firm to buy from hold. "Even assuming a worst case for each of our four material risks, we still see fair value of 3,514 pence, or 30% upside," the broker said.
Turning to earnings and shares of mobile-satellite-communications-services firm Inmarsat (UK:ISAT 611.50, +16.50, +2.78%) rose 3.9%.
Third-quarter net profit rose to $50.2 million, from $37.6 million a year ago. Revenue climbed to $176.7 million, from $162.5 million last year.
The firm said that it continues to see growth in its mobile-satellite-services markets and cost control and lower capital expenditure are contributing to strong adjusted operating profit growth. "We are well positioned to deliver on our targets for the full year," it said.
Shares of IMI (UK:IMI 511.00, +51.20, +11.14%) jumped 10.8%.
The engineering group said second-half operating margins will be better than previously expected, topping 14%, leading to adjusted earnings per share between 43 pence and 45 pence. Analysts polled by FactSet had expected earnings of 38 pence.
Selling prices remain resilient while low-cost sourcing initiatives and value engineering programs have reduced material prices in the year to date by around 5%.
