UK Indexes Rebound 0.9%; Weaker Employment Outlook

Arthi Gupta
15 Aug, 2011
New York City

The UK indexes gained nearly 1% on the first day of trading after a week of wild swings. Home prices in the UK fell for the second month in a row in August. Spectris agreed to acquire U.S.-based Omega Engineering for

[R]4:00 PM London – The UK indexes gained nearly 1% on the first day of trading after a week of wild swings. Home prices in the UK fell for the second month in a row in August. Spectris agreed to acquire U.S.-based Omega Engineering for £290 million.[/R]

The benchmark index in London rose nearly 1% after a week of tumultuous trading that saw the index plunging as much as 4% and rebounding more than 4%. The FTSE 100 index for the year is down 9.5%.

In London, FTSE 100 Index added 48.44 or 0.9% to 5,370.75 and the pound edged higher to $1.6360.

Banks led the decliners on the worries that the euro-zone malaise will spark a new round of losses in the next three quarters.

The European markets indexes traded on the first day of the week after Italian government proposed new austerity measures that will cut €45 billion of spending in the next two years. The measures need an approval from the parliament.

The Italian cabinet at an emergency meeting on Friday passed a €45 billion austerity plan that aims to meet budgetary requirements by the European Central Bank within two years. The cabinet agreed to €20 billion of cuts in 2012 and €25 billion in 2013.

UK Home Prices Fall

Home prices in the UK fell for a second consecutive month in August, according to a latest report from property Web site Rightmove published today.

Prices fell 2.1% on a monthly basis to £231,543 in August after a 1.6% fall in July, the report said.

From a year ago, prices dropped 0.3%, falling for the first time since September 2009. That follows a 0.1% climb in July.

Prices for homes in London fell 3.4% from a month ago but rose 3.2% on year to £418,008.

Employment Outlook Weakens

A private survey indicted a weakening employment outlook in the third quarter. The survey of 1,000 employers showed that the index that measures a proportion of hiring new staff to cutting the staff dropped to -1 from +3 in the previous quarter.

The outlook index for the next three months dropped to -6 from +2 in the previous quarter according to Chartered Institute of Personnel and Development.

The latest employment data released by the Office for National Statistics showed May unemployment fell 26,000 to 2.45 million and unemployment rate declined to 7.7% from 7.8%.

Spectris Acquires Omega Engineering

Spectris plc, the UK-based productivity-enhancing instrumentation and controls company agreed to acquire the Omega Engineering business for $475 million or about £290 million, on a debt and cash-free basis.

Spectris expects the acquisition to enhance adjusted earnings per share in the first full financial year of ownership.

Gainers & Losers

Among the most active stocks, Fresnillo led the gainers with a rise of 5.7% to 1,823 pence followed by Amec with a gain of 5.6% to 956 pence, Intertek Group added 4.6% to 1,986 pence, ITV increased 3.6% and Kazakhmys inched up 3.5% to 1,051 pence.

Banks were among the leading decliners. Barclays led the list with a loss of 1.8% to 183.80 pence followed by a declined in Sage Group of 1.6% to 253.40 pence, in Kingfisher of 1.1% to 233.60 pence and Lloyds Banking Group of 1% to 33.49 pence and Standard Chartered of 1% to 14,28,50 pence.

Michael Page International Plc dropped 12.2% to 351.70 pence after the recruitment consultancy firm reported first-half revenue grew 27.6% to £502.08 million from £393.52 million in the same period last year. Profit in the period dropped 27% to £30.46 million or 9.7 pence per share from £41.47 million or 12.8 pence per share in the prior-year period.

Tate & Lyle declined more than 1.1% to 581 pence and asked the European regulators to abolish the sugar quota after the recent price increase.