By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- U.K. stocks rose Monday, with Tesco PLC
helping their drive toward a third consecutive advance, but overall
gains were kept in check by a pullback in commodity shares.
The FTSE 100 was up 0.2% to 6,562.19, nudging closer to turning
positive on a year-to-date basis. The London benchmark moved higher
alongside the broader European market, as investors eyed the
prospect of sovereign quantitative easing from the European Central
Bank.
Riding higher on the Footsie were Travis Perkins PLC and Tesco ,
with shares up 3.1% and 2.3%, respectively. The building-materials
supplier's rating was upgraded to overweight from neutral at J.P.
Morgan Cazenove, while the supermarket chain was upgraded to
overweight from equal-weight at Morgan Stanley.
Tesco "has scope to materially improve its U.K. operations",
said Morgan Stanley. This, combined with a refocusing of its asset
portfolio, should see the retailer's shares outperform in the next
12 months, its analysts said. Morgan Stanley raised its
price-target on the stock to GBP2.60 and said its "bull-case"
target is GBP3.30.
J.P. Morgan said Travis Perkins is a "high-quality play on a
U.K. housing market in the early stages of recovery." Initiatives
that have been underway at the company should "start delivering
meaningful returns" and medium-term cash generation will become an
increasing focus over the 12 months to 24 months, the analysts
said.
In a busy day at J.P. Morgan Cazenove, analysts on Monday cut
ratings on a clutch of oil majors. Royal Dutch Shell PLC was cut to
neutral from overweight, and BP PLC to underweight from neutral. BP
shares fell 1%, while Shell's were down 0.7%.
But shares of BG Group PLC swung higher by 0.1%, as its shares
were raised to neutral from overweight by J.P. Morgan.
Oil futures declined Monday as J.P. Morgan slashed its price
forecasts and investors braced for another week of potential market
upheaval.
Mining stocks were also lower Monday, as prices for a number of
metals fell. Glencore PLC lost 1.5%, as did shares of Anglo
American PLC and Rio Tinto PLC (RIO) .
BHP Billiton PLC (BHP) shares were off 1.4% following a Reuters
report that the miner may have to cut $4 billion in planned
spending on U.S. shale wells. The report said BHP may also write
down shale assets as it grapples with falling prices for key
metals, including iron ore and copper.
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