UK Indexes Close Lower Tracking Weaker Resource Stocks

Nigel Thomas
12 Nov, 2010
New York City

UK stocks closed lower on a weakness in resource stocks. Copper prices declined from the record after China reported accelerating inflation. European leaders discuss renewed threat of sovereign debt stress in the region.

[R]5:30 PM London – UK stocks closed lower on a weakness in resource stocks. Copper prices declined from the record after China reported accelerating inflation. European leaders discuss renewed threat of sovereign debt stress in the region.[/R]

UK stocks declined tracking losses in resources stocks after inflation in China accelerated. The indexes were under pressure also as Ireland and Portugal were in focus and investors are facing renewed threat of debt stress.

Resource stocks declined after inflation in China perked up and the benchmark index in Shanghai plunged more than 5%. The news sent other markets in Asia lower.

Copper declined 2.9% to $8,875 a ton from its record price on the London Metal Exchange.

European markets declined and European leaders discussed the sovereign debt as Ireland and Greece take center stage in bond market trading.

The yields of sovereign debts of Ireland, Portugal and Greece declined between 50 and 60 basis points on the hopes that a restructuring plan may be worked out as early as this month. However, investors are increasingly facing a loss in holdings.

The UK benchmark index FTSE 100 index declined 18.36 or 0.3% to 5,796.87 and the pound closed at $1.61.

CAC 40 index declined 0.9% and DAX 30 index fell 0.2%. Indexes in Ireland, Greece and Portugal closed mixed.

World leaders after a meeting of G20 nations issued a statement that highlighted the division between consuming nations and emerging nations.

The weak statement lacking in details and prepared after much haggling only highlights broader issues related to trade and financial flows and does not identify the root causes of the imbalances and is silent on any corrective actions.

Stock Movers

BHP Billiton declined 2% to 2,362 pence and Rio Tinto Group dropped 2% to 4,316 pence. Antofagasta fell 2.7% to 1,432 pence and Kazakhmys dropped 3.4% to 1,498 pence.

Banks retreated after G20 nations did not announce any special measures for banks other than discussing Basel III revised capital guidelines.

Centrica Plc increased 1.25% 340 pence after the utility company said that households will face average 7% increase in consumer bill from December 10.

Essar Energy declined 1.2% to 250 pence after the India based power generator said that generation declined in the quarter ending in September after lower demand.

Misys declined 1.8% to 290 pence after the company acquired Sophis.

Royal Bank of Scotland Group Plc increased 2.2% to 41.90 pence and Bank of Ireland increased 6.3% to 40.80 pence.

Rolls Royce increased 4.6% to 611 pence after the company said it will miss its 2010 earnings outlook as it seeks to correct the fault with Trent 900 engine.