U.K. mining stocks rallied, led by BHP Billiton Ltd. after a newspaper reported the company has uncovered what may be the world’s largest gold resource.

Marks & Spencer Group Plc advanced as Deutsche Bank AG said the retailer’s earnings will prove a “positive surprise.” Wolseley Plc paced declining shares after earnings fell more than estimated. Homebuilders Taylor Wimpey Plc and Barratt Developments Plc also retreated.

The FTSE 100 Index gained 7.4, or 0.1 percent, to 6,464.1 at 2:51 p.m. in London as 60 members dropped. The FTSE All-Share Index rose 0.1 percent to 3,318.99. Ireland’s ISEQ Index lost 64.91, or 0.8 percent, to 7,804.44.

BHP Billiton rallied 5 percent to a record 1,738 pence. The world’s largest mining company is expected to say this week that it has uncovered the gold resources at its Olympic Dam mine in South Australia, according to the Herald Sun.

Gold traded near its highest level since 1980 in London as the dollar slumped to a record low against the euro, boosting demand for bullion as an alternative investment. Silver also gained.

Rio Tinto Group, the world’s third-biggest mining company, jumped 3.7 percent to 4,200 pence. Xstrata Plc, the fourth-largest copper producer, increased 4.9 percent to 3,297 pence.

Lead rose close to a record in London as stockpiles fell to a 17-year low. Copper, zinc and nickel also advanced.

Marks & Spencer rallied 5 percent to 595.5 pence. Deutsche Bank named the U.K.’s biggest clothing retailer as its “top pick” among general U.K. retailers.

`Positive Surprise’

“We believe the second half will prove a positive surprise and that profits growth will re-accelerate,” Deutsche Bank analysts, including Rod Whitehead, wrote in a report to clients.

Wolseley Plc retreated 4.2 percent to 812.5 pence. The world’s biggest distributor of plumbing and heating equipment said full- year profit fell more than estimated as a U.S. housing slump deepened and interest costs rose on acquisitions.

Net income through July dropped 12 percent to 474 million pounds ($962 million). Analysts predicted profit of 484 million pounds, according to a Bloomberg survey.

Taylor Wimpey, Britain’s biggest homebuilder, declined 5.2 percent to 272.75 pence. Barratt Developments, the U.K.’s second- largest by volume, fell 4.6 percent to 749.5 pence.

Smiths Group Plc increased 1.6 percent to 1,043 pence after the Sunday Times reported that chief executive officer Keith Butler-Wheelhouse will this week announce his departure and may start a review leading to the sale of some divisions, the Sunday Times reported, citing unidentified shareholders.

Smiths spokesman Chris Fox said the company will make a statement when there’s “something to announce.”

The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.

32Red Plc (TTR LN) added 0.5 pence, or 1.2 percent, to 42. The Gibraltar-based Internet gambling company may sell Bet Direct to BoyleSports, a closely held Irish bookmaker, the Sunday Times reported.

Barclays Plc (BARC LN) lost 13.5 pence, or 2.1 percent, to 620. Bear Stearns Cos. cut its recommendation on shares of the U.K.’s third-biggest bank to “underperform” from “peer perform.”

The brokerage said Barclays will probably fail in its bid to buy ABN Amro Holding NV and its shares are expensive compared with other U.K. banks.

Close Brothers Group Plc (CBG LN) gained 14 pence, or 1.7 percent, to 820. The 129-year-old London-based investment bank said full-year profit rose 22 percent to 133 million pounds.

Peter Hambro Mining Plc (POG LN) added 51 pence, or 4.4 percent, to 1,211. The second-biggest miner of gold in Russia almost doubled its first-half profit because of higher bullion prices and production.

Royal Bank of Scotland Plc (RBS LN) lost 7.5 pence, or 1.4 percent, to 516.5. JPMorgan Chase & Co said Royal Bank and its partners that are bidding for ABN Amro Holding NV will probably win the biggest financial-services takeover battle.

“We believe the consortium is `overpaying’ against the backdrop of structural credit market dislocation,” analysts said. They increased their estimate of the probability of the three banks winning to 95 percent from 75 percent.

Tesco Plc (TSCO LN) increased 6.75 pence, or 1.5 percent, to 449 after Citigroup Inc. raised its recommendation on shares of the U.K.’s largest retailer to “buy” from “hold.” Analysts said the company’s U.S. expansion may eventually add $100 billion in sales.

Irish Companies:

Iaws Group Plc (IAW ID) gained 45 cents, or 3.1 percent, to 15.20 euros. The Irish maker of Tim Hortons donuts said full- profit rose 24 percent to 123 million euros ($173.3 million).

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net .

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