UK Indexes Drop 1.3%; UK Retail Sales Rise

Arthi Gupta
17 Nov, 2011
New York City

The UK indexes traded lower after a dismal auction of 10 year Spanish bonds. The UK retail sales and auto production rose, but consumer confidence slumped in October. The UK government sold Northern Rock to Virgin Money for

[R]3:30 PM London – The UK indexes traded lower after a dismal auction of 10 year Spanish bonds. The UK retail sales and auto production rose, but consumer confidence slumped in October. The UK government sold Northern Rock to Virgin Money for £747 million. SABMiller first-half sales and net rose.[/R]

Stocks in London trading dropped for the second day in a row as the debt contagion widened in the euro zone to France.

The persistent record rates in the euro zone in Italy and Spain as Italian Prime Minister Mario Monti formed a new government of technocrats and unveiled a raft of tax and pension reforms.

However, markets remained skeptical and sovereign bond yields jumped to record rates for Spain, Italy and France.

In addition, yesterday Bank of England Governor Mervyn King also issued a cautious economic outlook and cited weakness in the euro zone.

Spanish Treasury issued €3.56 billion in 10-year bonds at a yield of 6.975% compared to 5.433% in the prior 10-year bond auction held on October 20. The bid-to-cover ratio declined to 1.54 compared to 1.76 on the previous occasion.

Virgin Money Buys Northern Rock

The UK government announced the sale of Northern Rock for £747 million or about $1.18 billion to Virgin Money.

The government will initially receive £747 million, plus an expected £50 million in cash six months after the sale is complete and an additional £150 million in the form of a capital instrument and £50 million to £80 million will be paid as an additional cash consideration upon a future profitable IPO or sale in the next five years.

In London, FTSE 100 Index declined 72.23 or 1.3% to 5,436.36 and the pound edged lower to $1.5784.

UK Retail Sales Rise

The UK retail sales increased unexpectedly in October driven by pre-Christmas sales and store promotions, the Office for National Statistics said Thursday.

Retail sales volume including auto fuel logged a monthly growth of 0.6% in October compared to a revised 0.5% rise in September.

Annually, sales growth advanced 0.9% in October from 0.5% in September.

The average weekly spending on online retailing increased to £561.5 million in October, up from £518.7 million in September, the ONS said.

UK Confidence Slumps

The Nationwide consumer confidence index for October declined due to high unemployment and fears of recession.

The main sentiment index fell 9 points from the previous month’s level to 36 in October, its lowest level since May 2004.

UK Car Production Up

UK October auto production increased from a year ago, according to data released by the Society of Motor Manufacturers and Traders showed today.

The number of automobiles manufactured in the month increased 14.1% from a year ago to 128,654. Production of commercial vehicles declined 2.9% on an annual basis to 11,337 in October.

Gainers & Losers

Amlin plc surged 6.7% to 312.70 pence after the insurance underwriting company said its gross written premium for the ten months ended October rose 7.1% to £2.05 billion from £1.92 billion last year.

Mothercare plc plunged 11.4% to 137.40 pence after the retailer stated first-half revenue grew 4% to £412.9 million from £397.1 million in the comparable period a year ago. Pre-tax loss in the period was £81.4 million versus pre-tax profit of £0.3 million last year.

SABMiller Plc fell 1.4% to 2,200.50 pence after the brewer reported first-half revenues grew 12% to $10.54 billion from $9.45 billion in the same period last year. Profit in the period rose 23.2% to $1.38 billion or 86.8 cents per share compared to $1.12 billion or 70.8 cents per share reported a year ago.

UBM plc declined 1.3% to 478.90 pence after the magazine publisher, news distributor and events organiser acquired the Online Marketing Summit from Online Marketing Connect on behalf of UBM TechWeb.

WS Atkins Plc soared 3.7% to 561.50 pence after the engineering and design consultancy reported revenue for the six-month period advanced 27% to £842.9 million from £664.2 million in the year-ago period. Profit for the period rose 18.7% to £34.9 million or 34.8 pence per share from £29.4 million or 29.5 pence per share in the prior year.