UK Debt Auction; Stocks Weak

Mayank Mehta
07 Apr, 2010
New York City

UK stocks traded lower after commodities prices declined. The pound declined after a seven day rally. The UK auction of five-year bonds worth

[R]4:00 PM London, 11:00 AM New York – UK stocks traded lower after commodities prices declined. The pound declined after a seven day rally. The UK auction of five-year bonds worth £4.5 billion attracted 1.88 bid-to-cover ratio compared to 2.33 in the auction a year ago.[/R]

In London FTSE 100 Index closed lower 18.29 or 0.32% to 5,762.06 and the pound edged lower to close at $1.519 and to close at €1.137.

The pound declined after a 7-day rally against the euro and the dollar after service industry index decreased to 56.5 from 58.4 published by Markit Economics and the Chartered Institute Purchasing and Supply.

The Debt Management Office completed the offering of 2015 bonds worth £4.5 billion that yields 4.75%. The auction attracted bid-to-cover ratio of 1.88 compared to 2.23 in the last auction in April 2009.

British Airways Plc said in a statement that March traffic declined 11% from a year ago after 7-day strike that began on March 20. The airline estimated loss of as much as 45 million and flew 79% of long-haul flights and 58% if short-haul flights during the strikes.

In the month, the airline filled 75% of its available seats, 2% higher than a year ago month according to the statement.

Worries of Greece defaulting on its sovereign debt continue to hamper Greek bonds. In Athens trading yields on Greek 10-year bond yields increased 0.16 to 7.14%. Yield premium to German bonds widened to 4.03%, the largest spread in eleven years.

Fourth quarter gross domestic product in the euro area and wider zone of 27 nations increased 0.1% compared to previous quarter. Seasonally adjusted GDP compared to the quarter a year ago decreased 2.2% in the euro area and 2.3% in the EU27 in the fourth quarter of 2009.

Daimler AG and Renault-Nissan agreed to enter into an alliance to build fuel efficient engines, develop small car technologies and share parts development costs.

Renault and Nissan each will take 1.55% stake in Daimler AG totaling 1.17 billion euros and Daimler will acquire 3.1% in Renault and same percentage in Nissan. The one time swaps are not expected to be increased according to the companies.

Gainers & Losers

Balfour Beatty plc the international infrastructure group rose 0.4% to 299.30 pence.

Beazley plc fell 0.6% to 108.90 pence after the specialist insurer and reinsurer today announced its estimated net losses arising from the earthquake in Chile over the weekend of February 27 and 28 in the range of $55 million to $75 million.

British Airways declined 2.1% to 238.2 pence after the company released March traffic statistics.

Chloride Group PLC slipped 2.4% to 217.40 pence after the power peripherals supplier reported fourth quarter total sales for the year were about 3% ahead of the prior year including a 4.5% impact from exchange.

Electrocomponents plc the electrical parts distributor gained 6.2% to 241.00 pence.

Heritage Oil Plc fell 8.3% to 532.50 pence an independent energy explorer issued and update on the proposed disposal of the company’s entire interests in Block 1 and 3A in Uganda to Tullow Uganda Limited.

Man Group soared 6% to 267.40 pence after new research report from Execution-Noble rated the stock “buy.”

Marston’s Plc added 2.9% to 97.20 pence after the pubs operator reaffirmed its sales and earnings estimate for the fiscal year.

Northern Petroleum Plc fell 1.9% to 125.50 pence after the AIM listed oil and gas exploration group announce that Nigel Wright has been appointed finance director and to the board of directors.

Norman Hay plc rose 1.1% to 79.90 pence after the provider of specialist chemicals sealants and industrial coatings said 2009 revenues fell 3% to £26.2 million from £27.0 million a year ago. Net profit for the year fell 41% to £925,000 or 6.3 pence per diluted share compared to net profit of £1.56 million or 10.4 pence per share a year.

PetroLatina Energy Plc gained 8.2% to 49.00 pence after the petroleum explorer said 2009 revenues rose 77% to $13.8 million from $7.8 million a year ago. Net loss for the year was $12.5 million or $0.28 per diluted share compared to net loss of $3.9 million or $0.12 per share a year.

Sirius Real Estate Limited dropped 4.7% to 0.25 pence after the company expects its trading performance for the 12 months to March to be in line with market expectations. During the period the company completed the development phase of the business.

Vodafone Group Plc fell 1.0% to 148.10 pence.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 37 increased, 66 declined and none were unchanged.

Petrofac Limited decliners in the FTSE 100 index with a loss of 4.11% followed by losses in Pearson Plc of 4.10%, in Enquest Plc of 3.62%, in Cairn Energy Plc of 2.98%, and in The British Land Company Plc of 2.73%.

Man Group Plc led gainers in the FTSE 100 index with a rise of 6.11% followed by increase in Kingfisher Plc of 2.77%, in Imperial Tobacco Group Plc of 2.63%, in Randgold Resources Ltd. of 2.17%, and in Next Plc of 1.99%.