By Carla Mozee, MarketWatch Burberry lifted by an analyst
upgrade
LONDON (MarketWatch) -- U.K. stocks advanced Wednesday, with the
prospect of a deal for BT Group PLC lifting its shares, but Thomas
Cook Group PLC shares lost one-fifth of their value after a
downbeat trading outlook.
On the economic front, data from the Office for National
Statistics confirm the U.K. economy grew at a rate of 0.7% in the
third quarter, in line with its preliminary estimate.
While the GDP figure also met market expectations, "if we look
at the data more closely we will see that the economy is consuming
more and still exposed to external shocks as the export figures
have decreased," wrote Naeem Aslam, analyst at Ava Trade, in a
note.
The pound briefly came under pressure after the GDP report, but
"hopes are still building up for an interest-rate rise once again,"
he said.
The pound slipped (GBPUSD) after the GDP report but recovered
ground as the session wore on, buying $1.5740 compared with $1.5706
before the data were released.
Stocks: The FTSE 100 gained 0.3% to 6,752.72 as mining,
utilities and consumer-goods shares advanced, topped by a 3.5% rise
in copper miner Antofagasta PLC .
U.K. stocks also moved higher along with the broader European
equity market after a key European Central Bank official said the
bank will consider launching full-blown quantitative easing if it
determines further economic stimulus is needed.
BT Group shares tacked on 2.1% as mobile operator EE said it's
holding exploratory talks with BT, although it's too early to say
whether a transaction will materialize. The confirmation from EE
comes after BT said Monday it's discussing the possibility of
purchasing O2, the U.K. mobile arm of Spain's Telefonica SA .
Shares of rival U.K. mobile services operator Vodafone PLC
climbed 1.3%.
Also higher were shares of Burberry , rising 0.4% after the
luxury-goods maker was upgraded to a buy rating, from neutral, at
Nomura. "Customer service and top-line growth look set to continue,
with beauty providing an accessible entry" to the brand, wrote
European luxury-goods analysts Christopher Walker and Anand
Vaidya.
Nomura upgraded the overall luxury-goods sector to bullish,
citing an increased focus on productivity and an attractive
cash-adjusted valuation.
But on the FTSE 250, Thomas Cook shares plunged 20% as the
travel-services company said it foresees a more moderate pace of
growth this year because of a tougher trading environment. The
shares were the worst performing among mid-caps. At the same time,
Thomas Cook said Chief Executive Harriet Green will step down
effective immediately. She will be replaced by Chief Operating
Officer Peter Fankhauser.
A reset of fiscal year 2015 expectations by Thomas Cook "is
disappointing and the CEO change is surprising," said Jefferies
analysts Mark Irvine-Fortescue and Ian Rennardson in a note. "But
standing back from it all, we remain confident in the turnaround
prospects and believe an inflection point is not far away, driven
by better hotel and airline yield management and further
digitisation of the business."
In other developments, the U.S. Justice Department is
investigating allegations that an employee at British banking
heavyweight HSBC Holdings PLC (HSBC) in 2010 leaked confidential
client information to a prominent New York hedge fund. The probe is
part of a larger criminal investigation into possible manipulation
in the currency market.
Shares of HSBC were up 0.2% in London trade.
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