By Sarah Turner
LONDON (Dow Jones)-- British shares advanced on Wednesday, with
investors buying up sectors that are closely tied to economic
growth such as miners and banks.
Investors appeared to ignore worries that higher interest rates
could choke off growth to the backburner, as the Organization for
Economic Cooperation and Development revised higher its growth
forecasts for the first time in two years.
Meanwhile, better orders for airplanes and machinery translated
into a stronger-than-expected 1.8% increase in U.S. durable-goods
orders in May, government data indicated.
Among miners, shares of Vedanta Resources advanced 3.2% and Rio
Tinto (RTP) climbed 5.6%. Banks on the move included Barclays
(BCS), up 4.5%, and Standard Chartered , up 5.3%.
A decision on U.S. interest rates from the Federal Reserve is
due to be announed after the European close. The Fed is widely
expected to leave monetary policy on hold.
"Ahead of today's FOMC meeting, global equities bounced in
anticipation that the Fed will signal that interest rates will
remain low for an extended period of time," said analysts at RBC
Capital Markets.
London's FTSE 100 index closed up 1.2% at 4,279.98. Shares in
the rest of Europe rose, as did U.S. stocks in early trading.
Brokers split on Land Securities
Shares in Wednesday's trading focus included commercial property
developer Land Securities , up 1%.
Land Securities was downgraded to in-line at Cazenove, with the
broker saying the shares look fair value at present, but got
upgraded to neutral from underperform at Credit Suisse after the
broker adjusted its profit and net-asset-value estimates.
Credit Suisse also upgraded the U.K. commercial property sector
to overweight from benchmark, citing U.K. economic momentum, an
inexpensive British pound against the euro, and property's value as
an inflation hedge.
British Land , up 1.3%, is the broker's key outperform
stock.
At the same time, Credit Suisse cut its rating on the U.K.
retail sector to 20% underweight from a previous underweight
position of 10%, noting that it's the only sector to have
outperformed prior to and since the market low in March.
"This is very unusual and typically shows that the sector has
moved too far," the broker said. Shares of home-improvement
retailer Kingfisher fell 1.5%.
In adddition, the Confederation of British Industry said in its
monthly distributive trades survey that British retailers saw a
second consecutive month of falling retail sales volumes in
June.
Also on the move, shares of Man Group fell 4.1% to 275 pence.
Morgan Stanley started placing 12 million shares priced between 267
pence and 272 pence each, Dow Jones Newswires reported, citing
traders.
Stagecoach, Inchcape advance
Outside London's top index, shares of Stagecoach rose 8.5%
following financial results.
The bus and rail company said that, while net profit for fiscal
2009 fell 46% to 133.5 million pounds ($219.6 million), the prior
year's profit included a tax benefit and gains from discontinued
operations.
Pretax profit rose 2% to 170.8 million pounds, while revenue
climbed 19% to 2.1 billion pounds, as both bus and rail operations
generated revenue growth, Stagecoach said.
Meanwhile, shares of U.K. car dealer Inchcape shot up 15.4%.
Second-quarter pretax profit is expected to be significantly
ahead of the 20 million pounds reported in the first quarter,
Inchcape said, though this would still well below the year-earlier
figure.
Services Desk; Dow Jones Newswires; +44-20-7842-9319/9274