By Simon Kennedy, MarketWatch
LONDON (MarketWatch) -- Shares in supermarket chains Tesco and J
Sainsbury were among the strongest performers in an upbeat session
for the U.K.'s benchmark index Tuesday, with consumer-products
company Unilever also rising on the back of a broker upgrade.
The FTSE 100 index closed up 0.7% at 5,808.45, with mining
stocks also among the top performers.
Other European markets rose Tuesday as expectations that
Ireland's parliament will approve the country's tough new budget
helped drive some indexes to multi-year highs.
In London, shares in Tesco gained 2.4% after the company said
sales in the latest quarter rose 8.2%, helped by strong growth for
its Asian and U.S. operations.
Jefferies International analyst James Grzinic said the figures
were "slightly better than anticipated," helped by a positive
impact from foreign-exchange rates and a strong performance from
the group's financial-services arm.
Rival J Sainsbury rallied 4.3% to 373 pence amid speculation
that Qatari shareholders may make a bid for the company.
A trader who asked not to be named said there is talk of a bid
at around 450 pence a share, but added that the share-price
reaction could also be attributed to Tesco's strong sales
numbers.
Talk of a potential bid from the Qatar Investment Authority,
which already owns over a quarter of J Sainsbury, has boosted the
stock on several occasions in the past.
Unilever (UL) jumped 2.9% after Morgan Stanley lifted its rating
on the group by two notches to overweight from underweight. The
broker said the likelihood of consistent sales growth and steady
margin improvement "have improved considerably," thanks in part to
a renewed focus on its higher margin businesses.
Oil and mining stocks added to the gains, with BP PLC (BP)
rising 1.1% as crude-oil futures temporarily climbed above $90 a
barrel. The move also came after reports that the firm could sell
some North Sea assets and that Pakistan's national oil firm has
asked for a deadline on bids for BP's assets in Pakistan to be
extended.
Metal prices also rose, helping drive shares in the volatile
mining sector higher. Chilean copper miner Antofagasta PLC rallied
4.9%. Xstrata climbed 1.6% after saying it expects to spend $23
billion on capital expenditure through 2016.
Among smaller companies, shares in house builder Bellway PLC
surged nearly 10% after the company said it expects pretax profit
for the fiscal year to rise 20%.
Wolseley , which supplies building materials and plumbing
products to contractors, was another climber, adding 2.7% on the
benchmark index after saying trading profit in its fiscal first
quarter rose 39% as demand improved in most countries.
The announcements lifted other construction-related stocks, with
house builders Barratt Developments PLC and Persimmon surging 9.5%
and 8.8% respectively.