By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Britain's benchmark stock index rallied
to its highest closing level in five years on Tuesday, as upbeat
German data spurred a risk-on mode across Europe.
The FTSE 100 index jumped 1% to 6,379.07, marking the highest
close since January 2008.
Shares of Standard Chartered PLC rose 2.4% after Morgan Stanley
lifted the bank to overweight from equal weight, citing an
improving outlook for its Asia business and recent underperformance
in the shares.
HSBC Holdings PLC , (HBC) was cut to equal weight from
overweight by Morgan Stanley, but the shares still climbed
0.4%.
"HSBC has now performed well on strong Asian earnings and an
improved balance sheet. It now appears fully valued, in our view,
given an uninspiring revenue outlook, and we move to" equal weight,
the Morgan Stanley analysts said in a note.
Shares of Vodafone Group PLC (VOD) declined 2% after Bernstein
cut the wireless-telecom firm to underperform from market
perform.
"Vodafone must belatedly pick its poison," the Bernstein
analysts said. "[Vodafone] can choose structural decline mitigated
by cost-cutting and increased spend, or it can try to buy its way
out of the problem," they said.
The broader U.K. stock market took inspiration from a European
rally after German data surprised to the upside. The ZEW
economic-sentiment indicator rose to 48.2 from a January reading of
31.5, exceeding expectations.
Oil firms were higher, even as oil prices nudged lower, with
Royal Dutch Shell PLC (RDSB) gaining 1.8%.
Shares of BP PLC (BP) inched 0.3% higher. The oil giant said it
would fight the U.S. government in court next week over claims for
fines related to the Deepwater Horizon oil spill. The company said
in a statement that it has always been open to settlements on
reasonable terms, but "faced with demands that are excessive and
not based on reality or the merits of the case, we are going to
trial."
Shares of Tesco PLC (TESO) moved 0.6% higher as J.P. Morgan
Cazenove initiated coverage of the supermarket retailer with an
overweight rating. The bank further started coverage of J Sainsbury
PLC and Wm. Morrison Supermarkets PLC with underweight ratings,
sending the shares 0.2% and 1.2% lower, respectively.
Shares of InterContinental Hotels Group PLC dropped 1.8%. The
hotel operator said revenue in China, one of its key growth
markets, dropped in the fourth quarter due to "the ongoing
industrywide impact of the China-Japan territorial island dispute,
the political leadership change and the broader economic slowdown
across the region."
Outside the main index in London, shares of InternetQ PLC rose
2.2%. The music-streaming-platform operator agreed to a strategic
partnership with Samsung Electronics Co. .
Shares of Drax Group PLC rallied 6.1% as the electric-utility
firm's 2012 results beat expectations.
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