U.K. Stocks Rally on Lloyds Earnings, U.S. Factory Data

U.K. stocks jumped the most in two weeks after Lloyds Banking Group Plc (LLOY) reported profit that topped analyst estimates and U.S. manufacturing expanded at the fastest pace in 10 months. Lloyds, Britain’s biggest mortgage lender, climbed 8.3 percent as first-quarter profit more than doubled. Imperial Tobacco (IMT) Group Plc gained 3.7 percent as its earnings matched projections. Chemring Group Plc (CHG) rallied the most in 13 years after winning two orders.

BP Plc (BP/) paced declining shares after net income dropped 19 percent. The FTSE 100 Index rose 74.45 or 1.3 percent, to 5,812.23 in London, the largest gain since April 17. The gauge fell 0.5 percent last month as Britain slipped into a double-dip recession and concerns grew that the euro-area debt crisis is deepening. The FTSE All-Share Index surged 1.2 percent today, while Ireland’s ISEQ Index climbed 1.1 percent.

“The market has been assisted by a number of factors that included a decent rally by bank stocks buoyed by better than expected first quarter numbers from Lloyds,” said Angus Campbell, head of market analysis at Capital Spreads in London. We’ve also seen “strength from U.S. markets where the news flow has been conducive to buying equities.”

Stocks extended gains today after U.S. data showed manufacturing in the world’s largest economy expanded in April, driven by gains in orders and production. The Institute for Supply Management’s factory index climbed to 54.8, exceeding the most optimistic forecast in a Bloomberg survey, from 53.4 in March. Readings greater than 50 signal growth.