UK Indexes Rise; Consumer Confidence Drops to 18-Month Low

Arthi Gupta
13 Oct, 2010
New York City

The UK indexes rose after U.S. Fed comments and a rally that lifted world markets. Resource stocks closed higher. The UK consumer confidence deteriorated in September and unemployment fell but claimant count rose. Standard Chartered planned rights issue and raise as much as

[R]4:00 PM London – The UK indexes rose after U.S. Fed comments and a rally that lifted world markets. Resource stocks closed higher. The UK consumer confidence deteriorated in September and unemployment fell but claimant count rose. Standard Chartered planned rights issue and raise as much as £7 billion.[/R]

The UK leading economic index growth slowed in August and public spending cuts to shed one million jobs.

In London, FTSE 100 Index traded higher 86.19 or 1.52% to 5,747.78 and the pound edged higher to close at $1.5813.

An index measuring consumer confidence in the United Kingdom was at 53 in September, following the revised 62 in August, according to survey data from the Nationwide Building Society. The September score reflected the lowest level since March 2009.

The number of unemployed fell in the three months to August, but claimant count rose for a second month in September.

The number of unemployed fell 20,000 to 2.45 million during the June to August period and the jobless rate fell to 7.7% from 7.8% recorded for the March to May period. The number of unemployed males fell 56,000 to 1.44 million, but female unemployment increased 36,000 to 1.01 million.

The number of people claiming jobseeker''s allowance in the UK rose 5,300 to 1.47 million in September, according to data from the Office for National Statistics released today. This is the second consecutive monthly gain in the number of claimants.

The statistics office said the increase in the total claimant count was mainly due to a rise of 4,200 in the number of female claimants. At the same time, the number of male claimants increased by 1,100.

The Conference Board leading economic index for the UK rose 0.1% in August following the 0.2% increase in July, the Conference Board said today. The Conference Board coincident economic index - a measure of current economic activity - was unchanged in August, after rising 0.3% in July.

Britain''s public spending cuts may shed nearly one million jobs in the country, around half of it in the private sector, according to a report from PricewaterhouseCoopers.

The report also showed that public sector spending cuts could reduce private sector gross output by around £46 billion per annum by 2014-15.

Standard Chartered plc is planning to launch a rights issue to raise £5 billion to £7 billion, or $7.91 billion to $11.08 billion, as part of the company''s efforts to protect itself from the impact of the new Basel III capital rules, the Financial Times reported on Tuesday. The plan could be announced as early as this week, the report noted.

The Basel III rules proposed that banks must hold a Tier 1 capital ratio of 4.5% by January 2015 and a further 2.5%, totaling 7% when the rules take full effect in 2019, so that they could withstand future shocks in the financial system.

The company''s core Tier 1 capital ratio, seen as a measure of its ability to sustain future losses, was 9% at the end of June 2010, well within the normal range of global banks and ahead of the new 7% minimum set by the so-called Basel III capital rules. However, the FT report noted that 9% capital ratio today could be worth as little as 6% under those new parameters.

Grainger Equity Release Limited agreed to create a 50/50 joint venture with MREF II Equity Release Limited, a wholly owned unit of Moorfield Real Estate Fund II, to own the assets of Sovereign Reversions plc.

GERL received a cash consideration of £17.5 million from Moorfield for its 50% stake, representing 50% of the acquisition consideration paid by GERL for Sovereign. Additionally, Moorfield would contribute an additional sum to GERL to cover 50% of the associated acquisition and integration costs.

Hochschild Mining PLC reached an agreement with its joint partner International Minerals Corporation to increase its stake to 60% in Inmaculada, a 20,000 hectare gold-silver project located within its existing cluster in southern Peru. The initial cash consideration of the project is reported to be $15 million.

Balfour Beatty plc acquired the Halsall Group, a Canadian professional services firm based in Toronto, for a cash consideration of C$53 million. Halsall provides design and engineering services to the building market, with particular strengths in sustainable design and restoration. Halsall also provides structural engineering services to clients in the transportation market.

British author Howard Jacobson was awarded the 2010 Man Booker Prize for his comic novel ''The Finkler Question.''

Gainers & Losers

Avisen PLC gained 2.32% to 4.86 pence after the business and technology consultancy company first-half revenue surged 252% to £6.05 million from £1.72 million last year. Loss in the period was £6.19 million or 3.32 pence per share compared to profit of £0.19 million or 0.18 pence per share last year.

Bodycote plc surged 10.87% to 306.00 pence after the thermal processing company said revenues for the nine months to September 30, at constant exchange rates, were 13.3% higher than last year.

Burberry Group plc fell 2.50% to 1,013.00 pence after the British luxury company reported first-half total revenue increased 18% to £673 million, compared with £572 million a year ago. Comparable store sales grew 9% for the six-month period.

Omega Diagnostics Group Plc rose 1.64% to 15.50 pence after the medical diagnostic products maker said trading remains in line with management expectations with turnover about 15% ahead of the comparative period last year at £3.3 million.

Peel Hotels plc soared 7.38% to 69.80 pence after the hotel company stated first-half like-for-like sales increased 4.4% and on the same basis revpar, accommodation revenue per available room, increased 6% with occupancy up 11.4% and average room rate down 4.8%. Turnover for the period rose 15% to £8.28 million from £7.19 million a year ago.