By Steve Goldstein, MarketWatch
LONDON (MarketWatch) -- U.K. stocks registered solid gains on Monday to kick off 2010, with the mining sector seeing strength on continued growth out of China as markets across Europe advanced.
After finishing 2009 with a 22% rise, the U.K. FTSE 100 (UK:UKX 5,447, +33.67, +0.62%) rose 0.5% to 5,440.17.
The pound (CUR_GBPUSD 1.62, +0.01, +0.48%) fetched $1.6180 as a U.K. manufacturing-purchasing-manager's index rose to its highest level in nearly two years in December.
Meanwhile, two gauges of Chinese industrial activity pointed to the quickest acceleration in recent years. China is the main buyer of metals, so the news helped miners like Kazakhmys (UK:KAZ 1,347, +19.00, +1.43%) , which rose 1.4%.
The gains also came as Federal Reserve Chairman Ben Bernanke said in a speech Sunday that regulatory and supervisory policies, rather than monetary policy, were to blame for a rapid increase in U.S. house prices in the early parts of last decade, and Fed Vice Chairman Donald Kohn said that tightening policy to head off perceived threats from asset price increases "could be expensive."
Royal Bank of Scotland (UK:RBS 30.57, +1.37, +4.69%) (RBS 9.39, 0.00, 0.00%) rose 4.9% and Lloyds Banking Group (UK:LLOY 51.77, +1.08, +2.13%) (LYG 3.24, -0.03, -0.92%) gained 1.9%. The Sunday Times quoted an executive from Brazil's Itau Unibanco as saying that the lender may bid for the U.K. government's stakes in them.
Exane BNP Paribas upped RBS to outperform from neutral, saying the stock trades at just 0.6 times estimated 2011 tangible net-asset value, whereas it says RBS should be valued at 0.8 times tangible NAV, or 40 pence in all.
Separately, RBS said a deal to sell its Pakistan unit fell through.
Cairn Energy (UK:CNE 351.10, +18.40, +5.53%) surged 5.7% after inking a deal to get a second rig to drill in Greenland. See earlier story on Greenland.
Smiths Group (UK:SMIN 1,053, +39.00, +3.85%) rose 4% as U.K. airports operator BAA said full-body scanners would be introduced as soon as practical. Smiths makes airport scanning machines that are in use at BAA airports.
Cadbury (UK:CBRY 800.00, +2.50, +0.31%) (CBY 51.39, 0.00, 0.00%) rose 0.4% to 801 pence as the Financial Times and The Times newspapers reported that Kraft Foods is likely to increase its hostile offer for Cadbury within the next two weeks.
Since Kraft declared its interest in the U.K. group, Cadbury has traded as high as 820 pence and fallen as low as 739 pence.
Commercial property stocks lagged the market, with British Land (UK:BLND 470.00, -9.80, -2.04%) , Land Securities (UK:LAND 670.00, -14.50, -2.12%) and Hammerson (UK:HMSO 414.40, -9.60, -2.26%) all dropping by around 2%.
