UK Inflation Surges to 30-month High; Vodafone Net Falls 8%

Nigel Thomas
17 May, 2011
New York City

UK stocks turned lower after inflation surged to highest last seen in October. The Bank of England Governor Mervyn King blamed the recent pick up in inflation on higher taxes and energy prices. Vodafone Plc said annul net declined 7.8%.

[R]4:00 PM London – UK stocks turned lower after inflation surged to highest last seen in October. The Bank of England Governor Mervyn King blamed the recent pick up in inflation on higher taxes and energy prices. Vodafone Plc said annul net declined 7.8% and took impairment charges for Spain and other smaller European markets.[/R]

FTSE 100 index declined 31.66 or 0.6% to 5,892.03 and FTSE All Share index fell 17.13 or 0.5% to 3,070.31.

Market indexes in Paris, Frankfurt, Milan declined but in Madrid and Lisbon edged higher.

UK annual inflation measured at consumer prices increased to 4.5% in April from 4.0% in March. The index is at its high since October 2008.

In a letter to Chancellor of Exchequer George Osborne, Bank of England Governor Mervyn King said that the increase in VAT and the high energy and food prices are contributing to the recent surge in inflation.

In the year to April, Road Price Index, the measures the inflation for retail consumer items, annual inflation fell to 5.3% from 5.4% to March.

German benchmark index declined after private think tank ZEW survey indicated a decline in economic confidence for the third straight month.

The index fell to 3.1 in May from 7.6 in April and significantly below the historic average of 26.5. The mood turned sour after Greece debt restructuring gained momentum in the last three months.

Spain sold 5.47 billion euros of 12-month and 18-month treasury bills that attracted higher interest compared to the previous auction. Greece sold 1.625 billion europs of 13-week of treasury bills.

Stock Movers

Of the most active stocks, Essar Energy increased 2.9% to 424.10 pence, 3i Group gained 2.7% to 294.20 pence, Centrica added 1.7% to 319.60 pence and Vodafone inched up 1.3% to 170.50 pence.

Miners and tech companies were among the leading decliners. IMI fell 4.4% to 1,025 pence, Fresnillo fell 2.8% to 1,313 pence, GlaxoSmithKline dropped 2.1% to 1,320 pence and ARM Holdings edged 2% lower to 570.50 pence.

Vodafone Group Plc increased 1.3% after the mobile telecom operator said annual net declined 7.8% to 7.97 billion pounds on revenues increase of 3.2%. The mobile carrier also took impairment charges for its operations in Spain and Eastern European markets.

Capital Shopping Centers Group increased 3.90 pence to 395.10 pence after it said shoppers visit at its malls increased 3% in the year so far. The company also said occupancy at its centers declined to 96.8% from 97.7% at the beginning of the year.