By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Shares of Admiral Group PLC led U.K.
stocks higher on Monday after a broker upgrade, while publishing
firm Pearson PLC dropped after slashing earnings forecasts.
The FTSE 100 index gained 0.2% to 6,166.84.
Admiral Group jumped 4.4%, as Goldman Sachs lifted the car
insurer to buy from neutral and added the firm its conviction-buy
list.
"While we acknowledge that the U.K. motor cycle is softening and
that Admiral's ancillary revenue is likely to decline, we believe
there is potential for claims inflation to decline faster than the
market expects," the Goldman Sachs analysts said in a note.
"On our analysis, as a result of renegotiated reinsurance terms,
the group has significant gearing towards lower claims inflation,"
they added.
The analysts further reiterated their buy rating on Aviva PLC ,
sending the shares 1.1% higher.
Shares of Unilever PLC added 0.6%. Investec Securities analyst
Martin Deboo upgraded the food producer to buy from hold, citing
the potential for margins to surprise to the upside in its
full-year earnings report due on Wednesday.
"From a macro, strategic perspective, Investec is bullish on
equities in 2013 and has resumed an overweight stance on staples.
In our opinion, this all points in the direction of renewed
enthusiasm for Unilever," he said in a note.
On a more downbeat note, shares of Pearson PLC slumped 3.5%,
after the publishing firm cut its earnings forecasts for 2012.
Drinks maker Diageo PLC lost 1.6%, as UBS cut the stock to
neutral from buy, according to Dow Jones Newswires.
Among other notable movers in London, mining firms were on the
rise. Eurasian Natural Resources Corp. gained 1.4%, while BHP
Billiton PLC (BHP) added 0.5%.
Oil firms were also mostly higher with shares of Royal Dutch
Shell PLC (RDSB) up 0.3% and BG Group PLC 0.2% higher.
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