UK Trade Deficit Widens, Shop Price Inflation Eases

Arthi Gupta
11 Jan, 2012
New York City

The UK indexes declined on the mounting worries in the euro zone. The UK trade deficit widened in November and shop price inflation eased to 16-month low in December. BP and U.S.-based Sempra Energy planned $1 billion investment to develop wind farms.

[R]2:30 PM London – The UK indexes declined on the mounting worries in the euro zone. The UK trade deficit widened in November and shop price inflation eased to 16-month low in December. BP and U.S.-based Sempra Energy planned $1 billion investment to develop wind farms.[/R]

The UK indexes traded lower as leaders of France and Germany meet to discuss debt contagion and worries mount on the possibilities of Greek debt default.

In early trading, investors were cautious after an auction of 5-year German treasury notes saw strong demand with bids totaling €8.97 billion against the €4 billion on offer.

Germany sold €3.15 billion of treasury notes at an average yield of 0.90%.

However, the meeting between German Chancellor Angela Merkel and International Monetary Fund managing director Christine Lagarde yesterday did not provide any clue on the European debt crisis.

Lagarde is expected to meet with French President Nicolas Sarkozy today.

In London, FTSE 100 Index declined 33.23 or 0.6% to 5,663.26 and the pound edged lower to $1.5399.

UK Deficit Widens

The UK’s deficit on trade in goods amounted to a seasonally adjusted £8.6 billion in November from £7.9 billion in October, data from the Office for National Statistics showed today.

Exports of goods fell 0.4% from a month ago and imports dropped 0.2% in November.

The decrease in exports was driven by lower exports of silver to non-EU countries, including India.

The deficit on trade in goods and services was £2.6 billion in November compared with the deficit of £1.9 billion in October.

UK Shop Price Inflation Drops

UK shop price inflation eased to 1.7% in December from 2% in November, the British Retail Consortium said on Wednesday.

Non-food inflation slowed to a two-year low of 0.3% in December from 0.8% in November. Food inflation rose to 4.2% in December from 4% in November.

Gainers & Losers

Adventis Group Plc surged 3.8% to 0.83 pence after the marketing agency sold a number of assets of Adgenda Media Limited, its subsidiary to Mensola Co 116 Limited for £506,000.

BP plc fell 1.9% to 470.60 pence after the oil and gas explorer and Sempra Energy said that they plan to make a combined investment of more than $1 billion to develop wind farms in Pennsylvania and Kansas.

Grafton Group Plc climbed 2% to €2.55 after it stated that group turnover in 2011 rose 2.5% to €2.05 billion, from €2 billion in the prior year.

J Sainsbury Plc slid 1.2% to 302.30 pence after the grocery retailer said third quarter total sales rose 7%, reflecting a strong performance in Christmas.

SuperGroup Plc dropped 0.9% to 546 pence after the retailer said total group sales for the nine weeks from October 31, 2011 to January 1, 2012 rose 22% to £79 million from last year.