LONDON MARKETS: Tesco Rises In London After Broker Upgrade

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- U.K. stocks kicked off the week higher on Monday, with Tesco PLC among gainers after a broker upgrade and banks benefiting from positive trading sentiment.

The FTSE 100 index rose 0.2% to close at 6,277.06, adding to a 0.6% gain from Friday.

Tesco (TESO) picked up 1.5% after Exane BNP Paribas lifted the food retailer to neutral from underperform, citing better sales performances.

British Land Co. gained 0.5% after the real-estate investment trust said it bought a portfolio of properties in London from Wereldhave NV for 183.8 million pounds ($289.6 million).

Risk-sensitive sectors, such as banks and resource firms, were also on the rise, benefiting from investors' willingness to take on more risk.

Shares of Barclays PLC (BCS) rose 1% ahead of the bank's full-year earnings report scheduled for Tuesday, with expectations it will announce cost-cutting measures.

Royal Bank of Scotland Group PLC (RBS) added 0.4% and Standard Chartered PLC put on 0.6%.

Among energy firms, shares of BG Group PLC added 0.8% and Royal Dutch Shell PLC (RDSB) gained 0.9%. Oil prices were higher.

Mining firms were also among notable movers, as UBS analysts in a note highlighted the potential for commodity demand in 2013, which "will drive the sector to new highs in 2Q13."

"Improving credit dynamics mean that the incentives for corporates globally have switched dramatically--from inducing destocking six months ago to inducing restocking now," Julien Garran, analyst at UBS, said in a note.

"The potential for restocking is large. In the US and Germany, we saw copper and aluminum consumption run 10% behind end-demand," he added. "Consensus consistently underestimates the power of restocking cycles after a heavy destock in the previous year."

Among UBS's favorite mining picks were Glencore International PLC , up 0.4%, Xstrata PLC , up 0.5%, Kazakhmys PLC , 1% higher, and Rio Tinto PLC (RIO), off 0.1%. Metals prices were mostly lower.

Shares of power-systems company Rolls-Royce Holdings PLC inched 0.9% lower. The firm said it has been awarded a $97.3 million contract from the U.S. Air Force to support its C-130J transport fleet in 2013.

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