UK Retail Sales Rise; Osborne Raises Taxes on Banks

Marcus Jacob
08 Feb, 2011
New York City

UK stocks edged higher and commodities traded mixed after China hiked interest rate for the third time in five months. UK retail sales rose at the fastest pace in ten months. Premier Foods agreed to sell its canned food business for

[R]4:00 PM London – UK stocks edged higher and commodities traded mixed after China hiked interest rate for the third time in five months. UK retail sales rose at the fastest pace in ten months. Premier Foods agreed to sell its canned food business for £182 million to repay debt.[/R]

FTSE 100 index increased 26.57 to 6,077.60 and the FTSE All Share index increased 11.52 to 3,151.08.

UK retail sales rose sharply in January according to the latest data from British Retail Consortium.

Retail sales at stores opened at least one year rose at the fastest pace in ten months by 2.3% from a year ago. Sales declined 0.8% in December as the inclement weather kept shoppers away from stores.

In the quarter to January, like-for-like food sales rose 1.4% and non-food sales increased 0.4%. Non-food sales have been falling and increased for the first time since the quarter ending in August.

Chancellor George Osborne increased levy on bank profit by 800 million in the current year compared to the previous plan phasing it in by the next year.

The levy in the current year will be increased £800 million to £2.5 billion as the Treasury struggles with banks to rein excessive bankers pay that is not tied to the long term performance.

Premier Foods agreed to sell its canned food business for £182 million to Princes Limited and lower its debt. The debt laden group said for the year ended in December sales increased to 334.2 million and trading profit £27.8 million.

On the earnings front, ArcelorMittal reported a net loss in the final quarter of 2010 but guided higher net in the current quarter and Xstrata annual net soared on 38% increase in higher coal prices. Sara Lee net plunged after raw ingredients costs rose.

ArcelorMittal gained as much as 4.5% in European trading after it reported a net loss of $780 million in the fourth quarter. Profit in the year rose to $2.92 billion from $157 million a year ago on revenues of $78 billion compared to $61.02 billion.

Higher raw materials cost and sluggish demand curtailed company’s ability to pass on the costs to consumers.

Xstrata Plc, Switzerland based largest steel exporter said 2010 net soared 86% to $5.15 billion from $2.77 billion in the prior year.

The company benefited from the 38% increase in coal prices in 2010 to $99 a ton. The debt declined 38% to $7.6 billion and earnings per share increased to $1.77.

Stock Movers

Inmarsat soared 3.8% to 714 pence after Harbinger Capital announced last night that it will sell its remaining stake of 14% in the company after UBS and Credit Suisse waived its 180-day lock up period. Harbinger raised £410 million from the sale of 65 million shares earlier.

BG Group increased 1.3% to 1,458 pence after the natural gas explorer said fourth quarter net increased 3% on lower exploration costs and higher energy prices.

Marks & Spencer Group gained 2.5% to 368 pence after the company appointed former Tesco.com and Tesco Direct head Laura Wade-Gery as the head of its e-commerce operation.