UK Indexes Fall; Cameron Warning

Arthi Gupta, Mayank Mehta and Sanjay Barot
07 Jun, 2010
New York City

UK markets closed lower as Prime Minister Cameron urged the nation and the government to trim its deficit. Manufacturing output grows in the second quarter. BP said it made progress in capturing as much as half the leaking oil in the Gulf of Mexico well.

[R]4:30 PM London – UK markets closed lower as Prime Minister Cameron urged the nation and the government to trim its deficit. Manufacturing output grows in the second quarter. BP said it made progress in capturing as much as half the leaking oil in the Gulf of Mexico well.[/R]

British Prime Minister David Cameron said today overall public finance position is worse than expected and its potential consequences are more critical than feared.

He said urgent action is necessary to tackle the country''s huge budget deficit and growing debt. Prime Minister Cameron warned that the budget cuts will have ""enormous implications"" for the country but said he is determined to carry out the measures in a way that is ""open, responsible and fair.""

Cameron stated that interest payments on the government''s debt would amount to £70 billion in five years'' time. ""That is simply a staggering amount,"" he said. The UK has a budget deficit of around £156 billion or 11.5% of its GDP.

BP Plc containment cap funneling off 10,000 barrels of oil a day,

In London FTSE 100 Index traded lower 59.76 or 1.17% to 5,066.24 and the pound edged higher to close at $1.450 and close at €1.212.

Hungary’s Economy Minister Gyorgy Matolcsy told CNBC television that there were gaps in communication last week, but “it is blatant that Hungary is not Greece.”

A growing number of Britain''s manufacturers recorded optimistic trading conditions over the second quarter on the back of rising demand in overseas and domestic markets, according to a survey published by Engineering Employers Federation, the manufacturers'' organization and BDO LLP today.

The output balance rose to 30% in the second quarter from 8% in the prior quarter. At the same time, new order balance rose to 34% from 2%.

A containment cap that BP Plc fixed to stem oil gushing from a ruptured well in the Gulf of Mexico is making headway, funneling off 10,000 barrels of oil a day, the company said.

BP Plc said, the LMRP containment dome, located about one mile or 1.6 km under the ocean''s surface, collected 6,077 barrels of oil from the well on Friday, the first day the new containment dome was operational.

The amount has risen since Saturday, and implies more than half the estimated 12,000 to 19,000 barrels leaking each day is now being captured.

The BP oil spill response team set the containment system operational on Thursday.

The containment cap is designed to funnel most of the leaking oil to a boat on the surface. The rate of oil siphoning should increase once engineers tweak equipment at the well site.

Gainers & Losers

Begbies Traynor Group plc, the professional services consultancy group declined 1.6% to 60.00 pence.

BP Plc, the oil and gas company rose 2.2% to 443.05 pence.

BlueBay Asset Management plc, the fund manager fell 3.7% to 274.30 pence.

E2v technologies plc fell 7.5% to 49.00 pence after the electronic component maker said fiscal year 2010 revenues fell 14% to £201.2 million from £233.2 million a year ago. Net loss for the year was £2.3 million or 1.66 pence per diluted share compared to net loss of £21.3 million or 21.75 pence per share a year ago.

Gulf Keystone Petroleum Limited fell 1.6% to 73.25 pence after the oil and gas company said 2009 net loss was $96.3 million or 22.80 cents per diluted share compared to net loss of $59.0 million or 18.61 cents per share a year ago.

Gulfsands Petroleum Plc, the oil explorer fell 0.9% to 257.00 pence.

HSBC Holdings plc, the banking and financial services company rose 0.6% to 634.30 pence.

Lamprell plc, the oil engineering services provider fell 2.7% to 209.00 pence.

Latchways plc fell 2.9% to 660.00 pence after the safety products and services firm said fiscal year 2010 revenues fell 8.4% to £33.9 million from £37.0 million a year ago. Net profit for the year fell 3.5% to £5.5 million or 49.12 pence per diluted share compared to net profit of £5.7 million or 51.47 pence per share a year ago.

Phoenix IT Group plc rose 1.2% to 243.00 pence. The IT services provider said fiscal year 2010 revenues fell 2.9% to £245.8 million from £253.2 million a year ago. Net profit for the year rose 74.5% to £19.2 million or 24.6 pence per diluted share compared to net profit of £11.0 million or 14.2 pence per share a year ago.

Prudential plc fell 0.9% to 551.00 pence. The international financial services company said sales for the first five months rose 27% to £1.36 billion from £1.07 billion a year ago.

Vectura Group plc traded unchanged at 38.00 pence after the specialist pharmaceuticals group said fiscal year 2010 revenues fell 28.5% to £40.1 million from £31.2 million a year ago. Net loss for the year was £10.2 million or 3.2 pence per diluted share compared to net loss of £16.7 million or 5.2 pence per share a year ago.