UK Jobless Rate Declines, RBS Exits Asset Protection Scheme

Arthi Gupta
17 Oct, 2012
New York City

The UK indexes advanced after unemployment rate fell unexpectedly in three months to August. Pearson agreed to acquire EmbanetCompass for $650 million. The Royal Bank of Scotland agreed to exit the government

[R]5:00 PM London – The UK indexes advanced after unemployment rate fell unexpectedly in three months to August. Pearson agreed to acquire EmbanetCompass for $650 million. The Royal Bank of Scotland agreed to exit the government’s asset protection scheme.[/R]

The UK indexes edged higher after the jobless rate fell. The minutes of the Bank of England meeting confirmed that policymakers were unanimous in retaining asset purchase program and key rate at unchanged levels.

In London, the benchmark index FTSE 100 gained 40.37 or 0.7% to 5,910.91 and the pound edged higher to $1.6166.

The Bank of England policymakers unanimously decided to maintain quantitative easing at £375 billion and the interest rate unchanged at 0.5%, according to the minutes of the meeting held on October 3 and 4.

However, there seemed to be differences in opinion on additional stimulus measures to boost economic growth.

UK Jobless Rate Drops

The UK unemployment rate fell unexpectedly between June and August, the latest data from the Office for National Statistics showed today.

The unemployment rate for people aged 16 and over fell to 7.9% in the June-August period from 8.1% during March-May.

The seasonally adjusted claimant count rate for the UK was 4.8% in September, unchanged from August. The claimant count or jobless claims fell by 4,000 from a month earlier to 1.57 million in September.

Gainers & Losers

BHP Billiton plc soared 3.3% to 2,014 pence after the miner reported September quarter iron ore production rose 1% to 39.77 million tons from the year ago quarter. Copper production for the quarter rose about 24% to 273,900 tons from a year earlier.

Diageo plc fell 1.5% to 1,756.50 pence after the alcoholic beverages maker reported first quarter organic net sales growth of 5% against the 9% organic net sales growth in the comparable period. Volume was up 2%.

Pearson PLC dropped 1.8% to $19.76 after the media and education company agreed to acquire EmbanetCompass from an investor group led by Technology Crossover Ventures and Knowledge Universe, for $650 million in cash.

Royal Bank of Scotland Group plc rose 2.7% to $9.28 after the lender agreed with Treasury to exit the UK Government’s Asset Protection Scheme effective October 18.

The APS is the mechanism through which Treasury provided backstop credit insurance for a portfolio of RBS assets and derivative exposures, in support of the new board''s turnaround plans for the bank.

Xstrata PLC surged 2.8% to 990.93 pence after the miner said in the third quarter production report that volumes of thermal coal, zinc and lead in concentrate and zinc metal increased compared to the third quarter last year.