U.K. Stocks Advance, Led by Mining Companies

U.K. stocks advanced for a second day, led by mining companies, after Australia’s central bank cut its benchmark interest rate and as investors speculated Spain will seek a bailout.

Bumi Plc (BUMI) led a gauge of basic-resource shares higher after its Indonesian unit said it will sell a subsidiary and make a rights offering to speed up debt repayment. Babcock International Group Plc (BAB) gained 3.7 percent after saying that full-year earnings will meet its forecast. Royal Bank of Scotland Plc and Lloyds Banking Group Plc (LLOY) fell at least 2.5 percent after UBS AG lowered its ratings on the lenders.

The FTSE 100 Index (UKX) rose 15.21 points, or 0.3 percent, to 5,835.66 at 12:44 p.m. in London. The gauge dropped 1.9 percent last week as Germany and France disagreed over a banking union for the euro area and concern grew that the latest round of U.S. stimulus will fail to promote economic growth. The FTSE All- Share Index also climbed 0.3 percent today, while Ireland’s ISEQ Index jumped 1.2 percent.

“The Australian rate cut is likely to benefit basic- resource stocks, with markets reversing early losses as investors become more sanguine about the likelihood of a Spanish bailout,” saidMichael Hewson, a market analyst at CMC Markets U.K. Plc in London. “Today’s unemployment numbers from Spain reinforce the inevitability of a bailout request.”

Spanish Jobs

Spain’s registered unemployment rose 79,645 in September to 4.7 million, according to data from the Labor Ministry in Madrid. The median estimate of economists in a Bloomberg survey called for an increase of 57,000. The number of people registering for jobless benefits rose 38,179 in August.

The Reserve Bank of Australia today lowered its target rate for overnight cash by a quarter percentage point to 3.25 percent. The majority of estimates by economists in a Bloomberg survey had called for no change.

In the U.S., Federal Reserve Chairman Ben S. Bernanke said the country probably won’t fall back into a recession even with growth too weak to lower the jobless rate. The central bank will sustain record stimulus even after the expansion gains strength, Bernanke said at a speech in Indianapolis.

A gauge of London-listed mining shares advanced 0.9 percent to a one-week high.

Bumi Plc rallied 8.8 percent to 163 pence after PT Bumi Resources said it may sell a subsidiary and conduct a rights offer as part of a plan to accelerate debt repayment.

Indonesia’s biggest exporter of thermal coal said it is considering a sale of PT Fajar Bumi Sakti. Bumi, founded by Nathaniel Rothschild, said Sept. 24 it began investigating “potential financial and other irregularities” into its Indonesian subsidiaries Bumi Resources and PT Berau Coal Energy. The shares have fallen 82 percent so far this year.

Rio, Antofagasta

Rio Tinto Group (RIO), the world’s third-largest mining company, rose 1.4 percent to 2,979 pence. Antofagasta Plc (ANTO) and Fresnillo Plc (FRES) gained 1.1 percent to 1,301 pence and 1.9 percent to 1,917 pence respectively.

Babcock advanced 3.7 percent to 956.5 pence after the company said it remains confident of meeting its own expectations for the current financial year. “Our businesses continue to experience buoyant market conditions, in both civil and military markets, as current and potential customers continue to seek increased efficiency and improved availability of assets,” it said in a statement.

Dividend Payout

Wolseley Plc (WOS) rose 2.5 percent to 2,749 pence after the world’s largest distributor of plumbing and heating products said it will pay shareholders a special dividend amounting to 350 million pounds ($565 million).

St. Ives Plc, a U.K. printing company, gained 6.3 percent to 84.75 pence after announcing a dividend of 4 pence a share. The company was expected to pay 3.75 pence, according to Bloomberg Dividend Forecasts that factor in earnings and options prices.

RBS fell 2.5 percent to 259.7 pence and Lloyds declined 2.6 percent to 38.94 pence after UBS lowered its ratings on both banks to neutral from buy citing a difficult regulatory environment.

Inmarsat dropped 0.7 percent to 590 pence after HSBC cut its rating of the shares to neutral from overweight, a recommendation similar to buy.