By Aude Lagorce, MarketWatch
LONDON (MarketWatch) -- U.K. stocks closed firmly higher
Thursday, as the mining sector rallied and retail stocks including
Burberry Group PLC and Kingfisher PLC surged.
The FTSE 100 index gained 2.2% to 5,767.56.
The index broke a three-day losing streak to close up 2.1% on
Wednesday on speculation that European policy makers may take
decisive new steps to prevent the sovereign-debt virus from
spreading to new countries.
The European Central Bank on Thursday said it will continue to
provide as much short-term liquidity as euro-zone banks require
through at least the first quarter of 2011 but didn't announce any
new measures. As expected, the ECB left its benchmark interest rate
unchanged at 1%.
U.S. stocks opened higher, helped by an unexpected jump in
October pending home sales and encouraging November retail
sales.
The rally in London was led by the mining sector, which is
particularly sensitive to economic growth prospects. Shares of Rio
Tinto PLC (RIO) advanced 4.9% and Antofagasta PLC gained 3.8%.
African Barrick Gold rose 2.4% after it said the initial mineral
resource at its Gokona and Nyabigena open pits in Tanzania
indicates potential.
Some retail stocks logged very sharp gains. Luxury-goods
retailer Burberry added 6.5% and home-improvement expert Kingfisher
surged 7.2%. The latter reported flat profit in the third quarter
as international sales offset a sluggish domestic performance.
Another top gainer on the benchmark index was TUI Travel PLC ,
which surged 7.3% after the leisure group reported an 11% increase
in annual operating profit and said it's made progress on its
restructuring. The optimism spread to InterContinental Hotels Group
PLC , which rose 4.7%.
In the financial sector, shares of Royal Bank of Scotland Group
(RBS) gained 4.2%. The U.K.'s Financial Services Authorities
Thursday said it won't take any enforcement action against the bank
or any individual linked to it following an 18-month investigation
into the circumstances that led to its bailout by taxpayers.
Barclays PLC (BCS) rose 2.6%. The Financial Times newspaper
reported that the bank will cut hundreds of jobs in the U.K. after
being hit by a slowdown in revenues.
In the aerospace sector, engine maker Rolls-Royce Group PLC
underperformed, up just 1.1%, after Australian airline Qantas
Airways Ltd. said it can pursue legal action against the firm.
Qantas last month was forced to ground its entire Airbus A380
fleet, which is equipped with Rolls-Royce engines, after one of the
planes had to make an emergency landing in Singapore. The aircraft
suffered an engine failure shortly after takeoff. An inquiry has
traced the problem to a single component in the turbine area of the
Rolls-Royce engine.
Qantas said in a statement Thursday it is in talks with
Rolls-Royce over the "financial and operational" impacts of the
incident.