UK Index Surges 2.5%; Manufacturing Index at 16-Year High

Arthi Gupta
04 Jan, 2011
New York City

The UK indexes surged as resource stocks soared and manufacturing expanded, mortgage approvals rose but money supply fell. Anglo American sold Moly-Cop and AltaSteel to Australia-based OneSteel for $1.08 billion. easyJet placed 15 aircraft order with Airbus.

[R]4:00 PM London – The UK indexes surged as resource stocks soared and manufacturing expanded, mortgage approvals rose but money supply fell. Anglo American sold Moly-Cop and AltaSteel to Australia-based OneSteel for $1.08 billion. easyJet placed 15 aircraft order with Airbus.[/R]

UK indexes surged on the first day of the year on the strength in the commodity prices. Indexes reflected the optimistic outlook on the global economic recovering. Gold, silver and copper trade at a two-year high and crude oil traders are looking for $100 a barrel.

In London, FTSE 100 Index surged 145.16 or 2.46% to 6,045.27 and the pound edged higher to close at $1.5630.

UK Manufacturing PMI Expands

UK manufacturing activity expanded strongly in December, Markit Economics said on Tuesday.

The Markit/Chartered Institute of Purchasing & Supply Purchasing Managers'' Index for the manufacturing sector rose to 58.3 in December, compared to a reading of 57.5 in November. This was the highest reading since 1994.

Mortgage Approvals Climb

The number of loans secured for housing purchases in the UK rose slightly to just over 48,000 in November, data released by the Bank of England showed on Tuesday.

In value terms, mortgages rose to £6.8 billion in November from £6.7 billion in October.

Gross mortgage lending by lenders in November was £2.0 billion, the same as in October, according to the Building Societies Association. Mutual societies approved mortgages of £1.9 billion in November, compared to £1.8 billion in October, according to the BSA.

M4 Money Supply Declines

UK M4 money supply decreased 0.8% on a monthly basis in November after adjusting to seasonal variations, compared to a 0.7% increase in October, data from the Bank of England showed.

Annually, the M4 money supply dropped 1.4% in November, as against a 0.8% fall in October.

M4 lending also declined 1.4% on a monthly basis in November, reversing a 1.1% growth in October. On an annual basis, the decrease was 2% in November following a 1.1% fall in October.

Demand for new employees in the UK declined in December from November''s record-high, data from recruitment firm Reed showed.

Reed.co.uk said that its job index fell to 104 in December from a record-high of 111 in November.

Anglo American Sells Businesses

Anglo American Plc, the miner said today that it completed the sale of Moly-Cop and AltaSteel businesses to Australian manufacturer of steel and finished steel products OneSteel Limited for cash proceeds of $1.076 billion.

easyJet Places Aircraft Order with Airbus

easyJet plc reached an agreement with Airbus to exercise existing options over 15 Airbus A320 aircraft for delivery between 2012 and 2014 with a list price of approximately $1.1 billion and to secure new options over a further 33 A320 aircraft.

In addition, 20 of the A319 aircraft which easyJet had contracted to acquire from Airbus have been converted into orders for A320 aircraft.

Gainers & Losers

Blacks Leisure Group plc surged 5.62% to 42.25 pence after the company engaged in the retail and wholesale of clothing and camping equipment said that total group sales in the period since August 28, 2010 dropped to £85.4 million from £95.8 million in the prior period, largely as a result of the stores closed in the restructuring program last year.

Cairn Energy Plc gained 2.86% to 432.00 pence after the oil and gas explorer secured two drilling vessels for its 2011 dual rig exploration program offshore Greenland. Leiv Eiriksson, a fifth generation semi-submersible drilling rig, and Ocean Rig Corcovado, a sixth generation drillship, are the two vessels contracted under the program to operate in the 2011 drilling season.

Both the drilling rigs are presently operated by Ocean Rig.

Hansteen Holdings PLC edged higher 0.31% to 81.75 pence after the said that Hansteen Property Unit Trust acquired Saltley Business Park, Birmingham, from LPA Receivers acting for Lloyds Banking Group, for £23.285 million, representing a net initial yield of 9.62%.

SABMiller plc climbed 1.24% to 2,284.50 pence after the global brewing and bottling company confirmed that Liz Doherty resigned from the board with effect from December 31, 2010.

Standard Chartered PLC advanced 2.17% to 1,763.00 pence after the British lender said it completed a $75 million mezzanine investment in Bahrain-based retailer Hassan Mohammed Jawad & Sons part of the Jawad Business Group.

Ultra Electronics Holdings plc rose 1.89% to 1,728.00 pence after the aerospace and defense contractor acquired Adaptive Materials Inc. from its founders, Dr Aaron and Michelle Crumm for an initial cash consideration of $23.0 million.