UK Indexes Lower, Construction Activity Rises; ASOS Plunges 9%

Arthi Gupta
02 Jun, 2011
New York City

The UK indexes slid after a downgrade credit rating of Greece to junk status. The UK construction sector activity rose more than estimated in May. ASOS and Redhall group plunged 9% on bleak outlook.

[R]4:00 PM London – The UK indexes slid after a downgrade credit rating of Greece to junk status. The UK construction sector activity rose more than estimated in May. ASOS and Redhall group plunged 9% on bleak outlook.[/R]

UK stocks declined following a weakness in the world markets and a decline in commodities prices. Global economic slowdown and the weak U.S. economic data added to market jitters in Europe and Asia.

Moody''s Investors Service downgraded Greece''s local and foreign currency bond ratings deeper into junk status, citing heightened risk that the country will fail to stabilize its debt position without a debt restructuring.

The Bank of England Deputy Governor Paul Tucker said central clearing parties are ""systemic"" for the markets.

Tucker noted that Central Clearing Parties simplify the complex network of counterparty exposures by acting as counterparty for all the trades they clear.

With the increasing importance of CCPs, there should be a policy to deal with the failure of a central counterparty, he said in London on Wednesday.

In London, FTSE 100 Index declined 25.66 or 0.91% to 5870.19 and the pound edged higher to close at $1.6374.

UK Construction PMI Rises

Growth in the UK construction sector picked up in May, data from Markit Economics showed today.

The Markit/Chartered Institute of Purchasing & Supply Purchasing Managers'' Index rose to 54 in May from 53.3 in April. The construction growth was supported by marked new order expansion.

Gainers & Losers

ASOS Plc plunged 9.1% to 2,125.00 pence after the fashion store reported fiscal year 2011 revenue increased 52% to £339.69 million from £223 million in the prior year. Profit for the year slipped 25.6% to £10.85 million or 13.7 pence per share from £14.58 million or 18.7 pence per share in the prior year.

Aviva Plc dipped 0.6% to 429.70 pence after the global insurance company said it has appointed Trevor Matthews as chief executive officer of its UK region and as an executive director of Aviva, subject to FSA approval.

Kingfisher Plc declined 1.63% to 277.50 pence after the home-improvement retailer said first quarter total sales rose 3.3% to £2.73 billion in the quarter. First-quarter retail profit grew 19.1% to £174 million and the growth was 20.9% in constant currency terms.

Redhall Group Plc slumped 9.1% to 62.75 pence after the specialist engineering support services group reported first-half revenues declined 1.7% to £64.32 million from £65.41 million in the same period last year.

WPP plc dropped 0.8% to 732.00 pence after the global media communications services company acquired 70% of São Paulo-based F. biz Ltda. Following the acquisition of a majority stake, F.biz will be independently positioned as part of WPP Digital.

Separately, the company at its annual general meeting said for the first four months of 2011 said worldwide revenues were up 6.2%.