U.K. Stocks Rise as BP Profit Exceeds Analysts’ Estimates

U.K. stocks climbed for a fourth day, extending a five-month high, as BP (BP/) Plc posted earnings that exceeded analysts' estimates, while Federal Reserve policy makers began a two-day meeting.

BP rallied the most since January 2011 after Europe's third-largest oil company also increased its dividend. Royal Dutch Shell Plc (RDSA), the region's biggest crude producer, rose 1.5 percent. Lloyds Banking Group Plc (LLOY) lost 2 percent after reporting that its loss widened in the third quarter.

The FTSE 100 Index (UKX) added 48.91 points, or 0.7 percent, to 6,774.73 at the close in London, its highest level since May 22. The equity benchmark has rallied 4.8 percent in October as U.S. lawmakers reached a last-minute deal to increase their government's borrowing authority. The broader FTSE All-Share Index also advanced 0.7 percent today, while Ireland's ISEQ Index decreased less than 0.1 percent.

"Investor sentiment is geared towards central-bank action and where we're seeing tapering going," Keith Bowman, an equity analyst at Hargreaves Lansdown Plc in London, said by telephone. "We've had a positive combination of earnings generally exceeding expectations while any central-bank action has been deferred. That's providing a positive backdrop for equities."

BP rose 5.6 percent to 477.5 pence. Third-quarter profit adjusted for one-off items and inventory changes dropped to $3.7 billion from $5 billion a year earlier, the London-based company said in a statement. That still beat the $3.4 billion average estimate of 13 analysts surveyed by Bloomberg. The oil producer raised its dividend by 5.6 percent to 9.5 cents a share.

Energy Companies

Oil and gas companies posted the biggest gain of the 19 industry groups in the Stoxx Europe 600 Index, rising 1.9 percent. Shell added 1.5 percent to 2,168.5 pence.

The Federal Open Market Committee starts a two-day meeting today to discuss whether to reduce its $85 billion of monthly asset purchases. The policy makers will not opt for less bond buying until they meet on March 18-19, according to economists surveyed by Bloomberg News earlier this month.

A Commerce Department report in Washington showed that U.S. retail sales unexpectedly fell 0.1 percent in September. The median forecast of economists surveyed by Bloomberg had called for no change. A separate release showed that the Conference Board's measure of consumer confidence declined to 71.2 this month from 80.2 in September, a bigger slide than economists had forecast.

Bovis Homes

Bovis Homes Group Plc (BVS) climbed 4 percent to 790 pence. Liberum Capital Ltd. raised its rating on the housebuilder to buy from hold. Persimmon Plc (PSN), the U.K.'s largest residential property developer, gained 2.5 percent to 1,255 pence.

"U.K. house prices are likely to continue to rise because of government help, subdued interest rates and good affordability, but there are enough checks and balances to ensure that price rises do not get out of hand," Charlie Campbell, a London-based analyst at Liberum wrote in a note.

Lloyds slid 2 percent to 78 pence after Britain's biggest mortgage lender posted a net loss of 1.3 billion pounds ($2.1 billion) for the three months through September. The bank said it set aside an additional 750 million pounds to compensate people wrongly sold loan insurance. Lloyds also reported better-than-expected pretax profit for the period.

Royal Bank of Scotland Group Plc, which is majority owned by the state, decreased 1 percent to 364.8 pence.