UK Indexes Down Tracking Losses in Europe, MITIE, Stobart Up

Nigel Thomas
23 May, 2011
New York City

UK market indexes declined after a weakness in the European markets. The benchmark index dropped nearly 2%. Mining and energy linked companies declined after commodities and crude oil prices declined. Stobart Group Ltd sales increased but net declined. MITIE Group full-year net advanced.

[R]4:30 PM London – UK market indexes declined after a weakness in the European markets. The benchmark index dropped nearly 2%. Mining and energy linked companies declined after commodities and crude oil prices declined. Stobart Group Ltd sales increased but net declined. MITIE Group full-year net advanced.[/R]

The UK market indexes declined after consumer confidence index fell and manufacturing order book index in May rose strongly.

The consumer confidence index published by Nationwide declined by 2 points in April to 43 and dropped 32 points form a year ago and only 4 points higher form the record low in February 2011.

The Confederation of British Industries total order book index increased to -2 in May from -11 in April. The export order book in May rose to -3 from -6. The production index decreased to 20 from 22 in April.

European markets opened lower and quickly accelerated losses. By the late afternoon the indexes in Germany, France and UK declined more than 1% and in Spain, Italy and Greece declined more.

The euro fell across all major currencies and traded at $1.4001.

FTSE 100 index declined 1.95% or 112.60 to 5,835.89 and All Share Index declined 1.9% or 57.31 or 3,042.66.

The CAC 40 index fell 1.76% and DAX index declined 1.8%. Index in Milan dropped 3.7% and in Athens declined 1.9% and in Madrid eased 1.2%. Weak crude oil prices also dragged miners lower.

The regional election results in Spain, Greek sovereign debt worries and a slowdown in China’s manufacturing compounded the market jitters.

Italian banks and insurance companies fell sharply after Standard & Poor’s lowered its view on the Italy’s debt rating of A+ to negative on the weakness in the government debt reduction targets. In addition, Fitch Ratings lowered debt rating of Greece.

Both rating actions lag the market perception and are generally ignored by market participants but stock investors sold stocks on the gathering storms in debt markets. Greece’s debt is expected to be restructured and Italy is expected to pay higher interest rates at its three next debt auctions in the year.

Italy’s 10-year bond yield rose by 4 points to 4.81%. Greece’s 10-year bond soared 48 basis points to 17.05% and Ireland’s 10-year bond debt increased 32 basis points to 10.86%. The yield on German 10-year bonds fell four basis points 3.02%.

Spain’s regional and municipal elections announced early Monday after counting 98% of ballots showed heavy losses for ruling Socialist Party to center-right Popular Party.

Stock Movers

Stobart Group Ltd increased 2 pence to 128 pence after the logistics firm reported revenues from continuing operations for the year ended in Feb increased to £500.4 million pounds from £447.7 million.

Underlying operating earnings declined to £57.2 million from £57.4 million. Net income declined to £29.5 million from £33.3 million a year ago. Adjusted earnings per share declined 9.7 pence from 10.8 pence from a year ago.

MITIE Group increased 10.40 pence to 220.4 pence after it reported pre-tax profit increased to £86.8 million from £79.7 million from a year ago. Revenues increased to £1.89 billion from £1.72 billion a year ago. The company also increased its full-year dividend increased to 9 pence from 7.8 pence from the previous year.