UKX FTSE 100 Index

By Carla Mozee, MarketWatch

Barratt shares rise after home builder posts a rise in profit

U.K. stocks pushed higher Wednesday, with Lloyds Banking Group PLC shares climbing after the lender posted a surge in profit as its winds down its compensation for misselling.

The FTSE 100 picked up 0.3% at 7,294.18, led by gains in the financial sector. The London index on Tuesday shed 0.3% (http://www.marketwatch.com/story/ftse-100-in-the-red-as-hsbc-slides-but-bhp-billiton-advances-2017-02-21).

Banking stocks were among the best performers, with Lloyds (LLOY.LN) (LLOY.LN) shares leading the way with a 3.8% advance.

The bank's pretax profit more than doubled to GBP4.2 billion ($5.2 billion), as it reduced the amount set aside to cover compensation for customers sold payment-protection insurance (PPI) they didn't need. It has also carried out a program of cost cuts, including the closure of branches.

Lloyds said it will pay a total ordinary dividend of 2.55 pence a share, up 13% on a year ago. It will also issue a special dividend of 5 pence per share.

"The recovery seems to be nearing completion, as the bank has boosted pretax profit, supported by a positive set of metrics, with notable improvements in earnings per share and net interest margin," said Richard Hunter, head of research at Wilson King Investment Management, in a note.

"The special dividend is representative of confidence in the outlook," he said.

Banks advance: HSBC shares (HSBA.LN) (HSBA.LN) (HSBA.LN) on Wednesday rose 0.7%. On Tuesday, they dropped 6.5%, their worst decline since March 2009, after the Asia-focused bank reported a wider fourth-quarter net loss of $4.23 billion. (http://www.marketwatch.com/story/hsbc-loss-widens-to-423b-plans-further-buyback-2017-02-21)

Shares of Barclays PLC (BCS) (BCS) , whose results are due Thursday, rose 1%. Shares of Royal Bank of Scotland PLC (RBS.LN) (RBS.LN) and Standard Chartered PLC (STAN.LN) gained 0.8% each ahead of financial results due Friday.

See:What to expect in Barclays earnings (http://www.marketwatch.com/story/what-to-expect-in-barclays-earnings-2017-02-20)

Movers: Meanwhile, Barratt Developments PLC shares (BDEV.LN) were up 2.8%. The home builder posted an 8.8% rise in first-half pretax profit to GBP321 million (http://www.marketwatch.com/story/barratt-to-increase-shareholder-returns-2017-02-22) and said it would return a higher proportion of its earnings through dividend payments.

Economic docket: Investors will watch for the second reading of U.K. gross domestic product in the second quarter, due at 9:30 a.m. London time, or 4:30 a.m. Eastern Time. The first estimate showed growth of 0.6% quarter-over-quarter and 2.2% on an annualized basis.

The pound was buying $1.2491 compared with $1.2460 late Tuesday in New York.

(END) Dow Jones Newswires

February 22, 2017 04:13 ET (09:13 GMT)

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