London – UK stocks climbed for the first time in three days, helped by a rebound in commodity producers, while the pound weakened the most in 11 months after the mayor of London said he’ll back an exit from the European Union (EU).
Rio Tinto Group and BHP Billiton jumped more than 5%, leading gains in the FTSE 100 Index, which climbed 1.2% by 10:32. The gauge is the best performer among major European peers this year, helped by a rebound in miners and weakening of the pound.
Prime Minister David Cameron last week negotiated new terms for Britain’s membership in the EU, and a referendum will be held on June 23, where voters will chose whether to leave or stay in the 28-nation bloc. London Mayor Boris Johnson, one of the UK’s best-known and most popular politicians, and Justice Secretary Michael Gove both said they’ll campaign for an exit.
While currency traders are bracing for months of swings in the pound, uncertainty over the vote isn’t having the same impact on equities. FTSE 100 volatility remains lower than a gauge for the eurozone.
Even mid-cap and smaller companies – deemed more prone to declines in a “Brexit” scenario – have dropped less than the Euro Stoxx 50 Index this year. Pictet Asset Management is among those saying the risk of the UK leaving the EU has yet to be fully reflected in the stock market.
Among stocks moving on corporate news, Associated British Foods added 1.6% after the owner of discount-clothing retailer Primark and Kingsmill bread raised its annual profit outlook. Home Retail Group Plc jumped 12% after offering £1.4bn to buy it, countering a bid by J Sainsbury. Sainsbury fell 1.6%.
HSBC Holdings sank 5% after posting a quarterly loss, hurt by a decline in income from lending, higher loan- impairment charges and fair-value losses on its debt.
