UK Indexes Slump; Jobless Claims Fall

Arthi Gupta, Mayank Mehta and Sanjay Barot
14 Jul, 2010
New York City

The UK indexes fall after a decline in commodities stocks. The BoE policy maker Andrew Sentance urges hike in interest rate and Haldane notes financial services productivity gains may be a mirage. The UK jobless claims fall and consumer confidence dips in June. BP postpones well integrity test.

[R]4:00 PM London – The UK indexes fall after a decline in commodities stocks. The BoE policy maker Andrew Sentance urges hike in interest rate and Haldane notes financial services productivity gains may be a mirage. The UK jobless claims fall and consumer confidence dips in June. BP postpones well integrity test.[/R]

In London FTSE 100 Index traded lower 65.12 or 1.21% to 5,207.30 and the pound edged higher to close at $1.5240.

The Bank of England policy maker Andrew Sentance reaffirmed his view that the central bank should start raising interest rate as economic conditions have changed compared to the previous year.

""Over a period of time we need to reassess the amount of support the recovery needs,"" Sentance said, according to excerpts of an interview published on the Reading Post Web site today. ""We need to start a process of moving interest rates up from what is an extremely low level and another reason for that is inflation hasn''t turned out to be as low as expected.""

Financial services productivity pre-crisis gains may have been a mirage than a miracle, Andrew Haldane, executive director for financial stability at the Bank of England said today.

""The recent history of banking appears to be as much mirage as miracle,"" he said, according to the text of a speech to be given at the Future of Finance Conference in London.

The remarks were based on a chapter from a book, ''The Future of Finance: The LSE Report'' published today by the London School of Economics. The chapter was co-authored by Haldane and BoE analysts Simon Brennan and Vasileios Madouros.

British labor market conditions have improved with declines in unemployment and the number of people claiming jobseeker''s allowances as well as a rise in employment, suggesting that the market is benefiting from the economic recovery.

The number of people claiming jobseeker''s allowance fell by 20,800 in June from May to 1.46 million, according to a report released by the Office for National Statistics today. The decline was larger than the expected drop of 20,000. The statistics office revised the decrease for May to 31,100 from 30,900.

The claimant count rate decreased to 4.5% from 4.6% in May.

British consumer confidence deteriorated for the second straight month in June to its lowest level in a year, as households fear fiscal tightening measures would pressure their income, results of a key survey revealed today.

The consumer confidence index dropped to 63 in June from 66 in May, the Nationwide Building Society said.

BP plc said the integrity test on the damaged MC252 well could not be started on Tuesday, as National Incident Commander Thad Allen said additional analysis of the well testing procedure should be performed before starting the well integrity test. According to the British oil company, this analysis would be conducted Tuesday night and into Wednesday. The decision follows a meeting with Energy Secretary Steven Chu and his team of scientific and industry experts.

The pressure test will verify whether a cap weighing 75 tons can block the leak without affecting the structural integrity of the well. After getting the clearance, BP''s engineers will close the valves and pressure will be monitored. High pressure would mean there are no other leaks, while low pressure readings would indicate that oil was leaking through the well''s external casting.

In its latest announcement, BP said that during this period, it would continue to ramp up containment operations on the Helix Producer and will continue to optimize the Q4000 operations. The Helix Producer has the capacity to capture around 20,000 - 25,000 barrels of oil per day. Historically, the Q4000 has flared an average of around 8,000 barrels of oil per day, BP said.

Europe Markets Review

In London FTSE 100 Index traded lower 40.38 or 0.77% to 5,230.64, in Paris CAC 40 Index decreased 22.16 or 0.61% to 3,615.60 and in Frankfurt DAX index traded lower 8.20 or 0.13% to 6,182.93. In Zurich trading SMI decreased 16.07 or 0.26% to 6,282.52.