BHP Billiton and financial stocks help Footsie hit three-week high

FTSE: 5,853.82 (+63.83) Mid-250: 11,701.48 (+109.07) Small Cap: 3,258.69 (–2.91)UK STOCKS gained the most in three weeks yesterday, as BHP Billiton rallied after reporting increased iron-ore output and Apple's better than estimated earnings boosted ARM.

The FTSE 100 climbed 63.83, or 1.1 per cent, to 5,853.82 at the close in London.

The gauge has fallen 3.9 per cent from this year’s high in February amid speculation that Europe’s widening debt crisis will derail the economic recovery.

The broader FTSE All-Share Index gained 1.1 per cent yesterday.

“US corporations are coming through with good earnings, and no one’s come out and said the second half is going to be disastrous,” said David Morrison, market strategist at GFT Global in London.

“I also think they’re reacting to the positive noises that came out yesterday indicating they’re closer to some sort of agreement” on extending the US debt ceiling, he said.

BHP Billiton advanced 1.7 per cent to 2,364.5p as the company said fourth-quarter iron-ore output rose 14 per cent, driving an 11th straight annual production record.

ARM gained 4.9 per cent to 611p, the biggest increase in two months. Apple’s expansion into China and other fast-growing economies helped make up for slower growth in the US.

Banks led the FTSE 100 higher, with Lloyds climbing 4.1 per cent to 44.91p, Barclays advancing 5.2 per cent to 222.6p, Royal Bank of Scotland gaining 3.1 per cent to 34.11p and HSBC increasing 2 per cent to 605.5p.

European leaders are meeting in Brussels today to discuss measures to restore confidence in the euro region’s creditworthiness.

London Stock Exchange rose 3.4 per cent to 1,030p after it said fiscal first quarter sales rose 2 per cent, helped by income from capital markets and information services.

Imagination Technologies, which also licenses chips for smartphones, soared 10 per cent to 419p.

Misys, a financial software provider, advanced 7.8 per cent to 411p after people with knowledge of the situation said it’s close to being acquired by Fidelity National Information Services.

ITV gained 3.8 per cent to 67.2p after analysts at UBS said it’s their most-preferred broadcaster, and the industry will rally when risk appetite returns. – (Bloomberg)