UK Service Sector Accelerates, Gross Reserves Fall

Arthi Gupta
05 Jan, 2012
New York City

The UK indexes declined after lower than expected demand for the French debt auction held today. The UK government said gross reserves fell, service sector growth accelerated and Ireland reported unemployment rate decreased in December.

[R]2:30 PM London – The UK indexes declined after lower than expected demand for the French debt auction held today. The UK government said gross reserves fell, service sector growth accelerated and Ireland reported unemployment rate decreased in December.[/R]

The UK indexes edged lower following the weakness in the European markets as the debt auctions from France and Germany drew weaker than expected response and banks prepare to raise more capital in the euro zone.

British lenders plan to tighten credit scoring criteria for granting new secured loans to households and a tightening of covenants on loans to large and medium-sized companies, the latest quarterly Credit Conditions Survey from the Bank of England showed today.

In London, FTSE 100 Index declined 30.41 or 0.5% to 5,638.74 and the pound edged lower to $1.5511.

Banks traded lower in London and Europe after Italy based UniCredit SpA planned to raise 7.5 billion euros at 43% discount to the stock price.

UK Gross Reserves Drop

The UK government''s gross reserves fell to $93.85 billion in December from $96.93 billion a month ago, the HM Treasury said today.

Net reserves fell by $1.94 billion in December, bringing the total to $43.62 billion at the end of December.

UK Service Sector Accelerates

The UK''s service sector growth accelerated in December, according to data from Markit Economics released today.

The headline seasonally adjusted Purchasing Managers'' Index rose unexpectedly to a five-month high of 54 in December compared to the 52.1 in November.

Irish Jobless Rate Falls

Ireland''s unemployment rate decreased in December, data released by the Central Statistics Office showed.

The seasonally adjusted unemployment rate decreased to 14.3% in December from 14.4% in November. In December 2010, the jobless rate was 14.7%.

The number of unemployed persons seeking claims rose to 434,784 in December from 429,567 in November.

The number of unemployed 25 years and below decreased by 6,934 from a year ago to 74,346 in December.

Gainers & Losers

Accenture Plc dipped 0.04% to $52.93 after the management consulting, technology services and outsourcing company said that Accenture Federal Services won a Blanket Purchase Agreement and four task orders from the U.S. Federal Bureau of Investigation.

Balfour Beatty Plc declined 0.9% to 274.20 pence after the infrastructure group secured a five-year extension to its existing contract with electricity and gas utility National Grid Plc in a deal worth up to £750 million.

Eruma plc surged 8.2% to 11.50 pence after the security systems provider said that its Illuminex lighting division has won an additional contact from the Police Authority worth over £325,000.

Games Workshop Group Plc soared 9.3% to 492 pence after the game production and retailing company said first-half revenue increased 4.5% to £62.72 million from £60.04 million the prior year. Profit in the period surged 43% to £6.91 million or 21.8 pence per share from £4.84 million or 15.4 pence per share a year ago.

JJB Sports Plc gained 19.6% to 6.70 pence after the sports retailer said comparable sales for the four weeks ending on December 26 rose 5%, while like-for-like cash gross margin grew 6% in the same period.