UK Rates on Hold; M&S Drops

Mayank Mehta
08 Apr, 2010
New York City

Bank of England left its key lending rate at 0.5% and also kept its asset purchase plan in place. UK production output in February fell by 0.1% from a year ago. Weak commodities dragged the market index lower at close. Marks & Spencer declined after company issued cautious outlook.

[R]4:00 PM London, 11:00 AM New York – Bank of England left its key lending rate at 0.5% and also kept its asset purchase plan in place. UK production output in February fell by 0.1% from a year ago. Weak commodities dragged the market index lower at close. Marks & Spencer declined after company issued cautious outlook.[/R]

Bank of England left its key lending rate at 0.5% as expected and where the rate has been more than twelve months. The central bank also left its plan to purchase £200 billion in government bonds and other assets.

UK production output in February fell by 0.1% from a year ago. Output in mining declined 7.6%, energy fell 2.6%. Manufacturing output increased 1.0% in February from a year ago month.

The Greek 10-year bonds yields increased 18 basis points to 7.35% as more investors speculated that the EU led bailout may unravel.

The European Central Bank left its key lending rate at 1%. The ECB President Jean-Claude Trichet stressed again today Greece is not likely to default.

Trichet said to reporters in Frankfurt after the rate decision, “A default is not issue for Greece.”

The euro was unchanged after the rate decision.

European retail trade sales in February decreased 0.6% compared to January in the euro area and in the wider zone of 27 nations. Compared with February 2009 retail sales index decline 1.1% in the euro area and 0.7% in the EU27.

In London FTSE 100 Index closed lower 64.38 or 1.12% to 5,697.68 and the pound edged lower to close at $1.519 and to close at €1.139.

Gainers & Losers

BG Group plc fell 0.3% to 1,159.00 pence after the oil and gas firm and partners Petrobras and GALP have successfully completed drilling a Tupi field appraisal well in the BM-S-11 license area, Santos Basin pre-salt, offshore Brazil.

British Airways Plc rose 0.04% to 238.30 pence after the airline and Iberia Lineas Aereas de Espana SA announced that they have taken additional steps towards creating a new European airline group by signing their merger agreement.

Hays plc added 1.1% to 113.60 pence after the recruiter said quarterly revenues increased 2% growth in net fees from the previous quarter, led by 7% sequential net fee growth in Asia Pacific. International business now represents 57% of group net fees.

International Public Partnership Limited decreased 0.1% to 114.30 pence an infrastructure manager said 2009 revenues rose 167% to £599.8 million from £224.9 million a year ago. Net profit for the year fell 9% to £9.1 million compared to net profit of £10.0 million a year.

Ladbrokes plc fell 1.0% to 156.70 pence after the bookmaker today announced that it has signed a conditional joint venture agreement with Groupe CANAL+ to target the French market through the launch of an online betting and gaming service which will be licensed and regulated in France.

Marks and Spencer Group plc decreased 1.4% to 372.60 pence after the retailer of clothing, food and home products said fourth quarter group sales rose 4.8% and UK sales up 6.2%. UK like for like sales rose 5.1% while M&S Direct sales increased 48%. International sales fell 5.9%.

Misys plc rose 0.9% to 244.40 pence after the financial and healthcare software provider reported trading in the three months to February 28 with revenues up by 7% and operating profit climbing by 18%.

Robert Walters plc rose 0.3% to 223.75 pence.

Salamander Energy plc declined 5.8% to 263.60 pence after the Asia-focused independent oil and gas exploration and production company said it has abandoned its Phu Kheng-1 well in block L27/43, in which it owns a owns a 27.2% interest.

The Phu Kheng-1 well is located at the Khorat Basin, onshore in north-east Thailand.

Vedanta Resources plc declined 2.7% to 2,838.00 after the metal production in fourth quarter was 194,000 tons, marginally lower than the corresponding prior quarter. Full year production increased by 5% to 769,000 tons compared to the previous year reflecting improved mining performance.

Victrex plc surged 10.1% to 985.00 pence after the plastics group said sales volumes increased 52% in its fiscal first half, totaling 1,170 tons.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 18 increased, 85 declined and none were unchanged.

Xstrata Plc decliners in the FTSE 100 index with a loss of 3.88% followed by losses in Eurasian Natural Resources Corporation Plc of 3.20%, in Burberry Group Plc of 2.97%, in Kazakhmys Plc of 2.87%, and in Lloyds Banking Group Plc of 2.81%.

British Airways Plc led gainers in the FTSE 100 index with a rise of 3.06% followed by increase in Smith & Nephew Plc of 1.81%, in ICAP Plc of 1.69%, in London Stock Exchange Group Plc of 1.57%, and in Smiths Group Plc of 1.24%.