UK Jobless Claims Rise, Unemployment at 7.9%

Arthi Gupta
14 Sep, 2011
New York City

The UK indexes gained after jobless claims rose less than estimated but unemployed soared to 7.9%. The European Central Bank offered to lend $575 million to two euro-zone banks. BP surged 4.6% after it acquired full control of Brazilian biofuel company Tropical BioEnergia.

[R]3:00 PM London – The UK indexes gained after jobless claims rose less than estimated but unemployed soared to 7.9%. The European Central Bank offered to lend $575 million to two euro-zone banks. BP surged 4.6% after it acquired full control of Brazilian biofuel company Tropical BioEnergia.[/R]

UK stocks traded higher after a week of sentiment and selling pressure driven by the worries related to the euro zone. Market indexes rebounded after French central bank rejected talks of nationalizing the three largest French banks.

Moody’s, the ratings agency lowered the debt ratings by one notch of the second and the third largest French banks. Societe Generale and Credit Agricole debt rating was lowered months after market perception had soured and stocks had lost more than 50% in value.

BNP Paribas debt was put on watch with negative implications.

The ratings agency also said that the final report from the Independent Commission on Banking released on September 12 will have no immediate rating impact for UK banks.

In London, FTSE 100 Index gained 69.37 or 1.33% to 5,243.03 and the pound edged lower to $1.5958.

UK Jobless Claims Up, Unemployment Soars

The number of people claiming jobseekers'' allowances in the UK rose 20,300 in August compared to the 33,700 increase in July, data from the Office for National Statistics showed on Wednesday. There were 1.58 million people claiming jobseeker''s allowance in August.

The claimant count rate was at 4.9% in August, up 0.1 percentage point from July.

The unemployment rate was 7.9% during three months ended July. But the total number of unemployed increased by 80,000 over the quarter to 2.51 million. This was the largest quarterly rise in unemployment since the three months to August 2009.

ECB Lends $575 Million to Two Euro-zone Banks

The European Central Bank on Wednesday said that it will provide $575 million to two banks in a seven-day dollar tender operation to ease pressures in the U.S. dollar funding markets. The fixed rate for the dollar tender will be 1.1%.

Gainers & Losers

Barratt Developments Plc dipped 0.20% to 76 pence after the home builder and property developer reported revenue for the year ended June 30 was almost flat with the prior year at £2.04 billion. Loss for the year narrowed 88% to £13.8 million or 1.4 pence per share from £118.4 million or 14.5 pence per share in the previous year.

BP plc soared 4.65% to 399.35 pence after the oil and gas explorer agreed to increase its share in Brazilian bio-fuel company Tropical BioEnergia S.A. to 100%, by purchasing the remaining 50% of the company from its current joint venture partners for a total cash consideration of about $71 million.

BP''s current joint venture partners in Tropical BioEnergia S.A. are Maeda S.A. Agroindustrial and LDC-SEV Bioenergia S.A.

Next Plc surged 6.6% to 2,489 pence after the retailer reported first-half revenues from continuing business, excluding VAT, grew 3.6% to £1.57 billion from £1.51 billion reported last year. Profit before tax for the period increased 8.5% to £228 million from £210.2 million reported a year ago.

Skywest Airlines Ltd. slumped 4.31% to 21.53 pence after the investment holding company said its Revenue Passenger Kilometers for the month of August decreased 10.5% to 22.97 million from 25.66 million in the prior year. Available seat kilometers plummeted to 38.8 million from last year''s 48.23 million.

Surgical Innovations Group plc plunged 16.8% to 10.72 pence after the designer and manufacturer of medical devices stated first-half revenues decreased 10.4% to 3.20 million pounds from 3.57 million pounds in the previous year. Pre-tax profit in the period dropped 38% to 474,000 pounds from 766,000 pounds in the earlier year period.