London ends higher; pension deal lifts BT

LONDON (MarketWatch) � BT Group PLC shares jumped Friday after the telecom firm reached a pension-plan agreement, while some U.K. bank stocks dropped after a watchdog urged lenders to raise more capital.

The U.K.�s FTSE 100 index UK:UKX �reversed an earlier loss to end the session up 9.24 points, or 0.2%, at 5,854.89. The index ended the week with a 1.9% decline.

BT Group UK:BT.A �surged to the top of the index and added 5.4% after it sealed a deal with the trustee of its pension plan. The agreement will cut the company�s pension-plan deficit by more than half to 4.1 billion pounds ($6.5 billion) and requires a lump-sum payment of $2 billion before the end of March.

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U.K. stocks spent much of the session in negative territory after recent macroeconomic data fueled concerns about slower growth globally. Data showed that sales of new homes in the United States dipped 1.6% in February to a seasonally adjusted annual rate of 313,000, slipping below analysts� expectations of an increase.

European stocks erased losses late in the session, while U.S. indexes turned mixed as equities on both sides of the Atlantic were on track for the largest weekly losses of the year.

Banks saw some temporary pressure after the Bank of England�s Financial Policy Committee urged banks to raise more capital, citing a still-fragile outlook for financial stability. HSBC Holdings PLC UK:HSBA �HBC �fell 0.9%. Read more about the committee�s recommendations.

Randgold Resources Ltd. UK:RRS �gave up 2%, as Citigroup downgraded the stock to neutral from buy. The gold miner dropped 12.6% on Thursday after a military coup in Mali, where it has operations.

On a more positive note, retailers gained as Deutsche Bank reiterated its buy rating on Next PLC UK:NXT �and raised the target price to �32.80 from �31, citing conservative expectations from the management, which �should lead to upgrades over the next 12 months.� Shares of Next rose 2.5% to �29.87.

Kingfisher PLC UK:KGF �followed Next�s lead and rose 1.5%. Among supermarkets chains, Wm. Morrison Supermarkets PLC UK:MRW �gained 1.4% and Tesco PLC UK:TSCO �added 1.8%.

Adding to the positive sentiment in London, most miners climbed as commodity prices rallied. Antofagasta PLC UK:ANTO � gained 2.7%, Fresnillo PLC UK:FRES �advanced 2.4%, Vedanta Resources PLC UK:VED �rose 2.2% and heavyweight Rio Tinto PLC UK:RIO �RIO gained 1.5%.�

International Consolidated Airlines Group UK:IAG �added 1.7%, as it offered to give up extra valuable takeoff and landing slots at London�s Heathrow Airport to secure regulatory approval for its acquisition of BMI British Midland from Germany�s Lufthansa DE:LHA .