Commodities firms lead advance among gainers on third positive day

FTSE:5,303.40 (+12.15) Mid-250:9,957.98 (+69.42) Small Cap:2,763.70 (-4.45)

UK STOCKS gained for a third day after a report showed employers in the US added more jobs than forecast last month, easing concern amid investors that the economic recovery is faltering.

Commodities companies, whose profits are closely tied to growth, led the advance, with Rio Tinto Group rising 1.2 per cent.

Royal Bank of Scotland Group and Lloyds Banking Group retreated more than 3 per cent as Moody’s Investors Service cut the ratings on their debt. Premier Foods plunged 42 per cent after saying third-quarter results were “significantly” below forecasts. The FTSE 100 Index gained 12.14, or 0.2 per cent, to 5,303.40. The gauge has rallied 3.4 per cent this week as investors speculated policy makers will reach agreement to shield financial institutions from the European debt crisis and as the Bank of England expanded its bond-purchase programme.

The FTSE All-Share Index added 0.3 per cent. This is a brief respite for equity markets,” said Chris Purdy, a trader at SpreadEx, in St Albans, England.

“It has provided a solid rally to end what has been a week of unsteady gains. However, once equity investors quit looking at this situation through a monthly employment microscope, they will realize that the bigger picture is still pretty dismal.”

US payrolls climbed by 103,000 workers after a revised 57,000 increase the prior month that was more than originally estimated. The median forecast in a Bloomberg News survey called for a rise of 60,000. The gain reflected the return to work of 45,000 telecommunications employees. The jobless rate held at 9.1 per cent. The slump in stocks last month dragged the price-earnings ratio on the FTSE 100 to 8.9 times the estimated profits of its constituent companies. That compares with the average multiple of 11.4 during the past five years, the data show.

Rio Tinto, the world’s second-largest mining company, advanced 1.2 per cent to 3,164 pence.

Vedanta Resources, the largest copper producer in India, jumped 4.2 per cent to 1,160 pence.

Xstrata increased 2.7 per cent to 910 pence. Copper, lead and tin rose in London. RBS, the UK’s biggest government-controlled bank, fell 3 per cent to 23.62 pence and Lloyds retreated 3.4 percent to 34.66 pence. – (Bloomberg)