UK Stocks Up, Libor Rate 9-year High

123jump.com Staff
12 Sep, 2007
New York City

UK stocks edged higher by 0.4% extending the gains of 2.4% from the previous session. The Bank of England governon said that lowering rates will only encourage reckless risk taking in the credit markets. He refused to lower rates. The Bank will provide added liquidity as a lender of last resort. Libor rate in pound is now at nine-year high. Overnight rate for interbank lending hovered near 5.9%. In other economic news unemployment declined and average income rose in July.

[R]1:30PM New York, 6:30PM London - UK stocks rose marginally helped by strength in consumer and oil stocks. Average London salaries rose 3.5% in August, as unemployment fall to 2.6%. Bank of England chief wants market to sober up.[/R]

Stocks in London gained for the second day in a row in mixed trading. FTSE 100 closed up 0.4% extending a gain of 2.4% from yesterday. Of the 102 stocks in the index, 66 stocks rose, 32 dropped and 4 were unchanged. Of the index stocks, 28 shares rose between 1% and 3.5%.

In London trading FTSE 100 finished up 0.4% or 24.9 at 6,305.60 on higher investor confidence. Consumer and oil shares rose, as real estate reversed previous gains.

Bank of England governor Mervyn King played down any bank attempts to institute drastic measures to calm down current market turmoil. In a letter to the UK’s Treasury Select Committee Wednesday, King acknowledged the financial market turbulence had caused worrisome moments for the bank and economy at large, but if “managed properly, it should not threaten our long-run economic stability.” The governor expressed unwillingness at extending financial support to banks that had assumed ‘too many risks too cheaply.’

He said: “The provision of large liquidity facilities penalises those financial institutions that sat out the dance, encourages herd behaviour and increases the intensity of future crises.” BoE has been reluctant to lend money to financial institutions heavily exposed to the U.S sub-prime mortgage market problems. Mr King stressed BoE must act as a lender of last resort.

The Office of National Statistics reported today average London earnings including bonus rose 3.5% in July from a year ago, and up from 3.4% in June. The increase was helped by stronger growth in manufacturing and private sectors. The Office reported as well that public sector employment fell by a seasonally adjusted 11,000 in the period April to June to 5.781 million. In central government employment decreased by 14,000 in the same quarter while in local government it increased by 3,000. The number claiming benefits fell by 4,200 to 852,900 in August.

The unemployment rate was 5.4%, down 0.1% from the previous quarter and down 0.2%. The number of unemployed people fell by 28,000 over the quarter and by 53,000 over the year, to reach 1.65 million. There were 662,700 job vacancies for the three months to August 2007. This is the highest figure since records began in 2001 and is up 20,300 over the previous quarter and up 64,600 over the year, said the Office.

Of the FTSE 100 shares, consumer and oil-related stocks gained most. Arms manufacturer, BAE Systems plc paced advancers rising 3.3% on news the group had landed a multi-billion dollar deal to supply weapons to most countries in Europe. Reckitt Benkise followed rising 3% while tobacco processor, British America Tobacco ended up 2.8%. Johnson Matthey gained 2.3% and clothing retailer, Next plc adding 2.2%.

Of the index stocks, Home Retail Group gained 2.1%, Resolution plc up 1.9% and Cadbury Schweppes lifted up 1.7%. Oil companies gained after international oil prices hit a record high $79 Wednesday. Royal Dutch Shell B & A rose 1.4% and 1.2% respectively, BG Group plc pushed higher 1.2% and BP plc climbed 1.1%.

In London mining, real estate and financial shares dropped. Legal and General Group led decliners falling 1.9% followed by Sabmiller plc down 1.6%. Rentokil Initial extended 0.52% Tuesday loss easing 1.2% today while BHP Billiton plc lost 1.2%. ITV plc fell 1.15%. Metal shares dropped. Vedanta Resource closed lower 0.9%, Anglo America plc lost 0.6% and Rio Tinto retreated 0.5%. Financial shares Royal Bank of Scotland, Capita Group plc, Old Mutual plc, ICAP plc and HSBC Holdings plc all fell below 1%.

[R]8:30AM New York - 6:30PM Mumbai – Sebi widens the acceptable to collateral to include highly rated debt securities. Steel Authority plans to double its steel capacity in four years. The Supreme Court of India permits Reliance Energy to bid for Mumbai Sea Link project.[/R]

Sensex in Mumbai trading lost 37.41 or 0.24% to close at 15,608.50. CNX Nifty fell 0.8 or 0.02% to close at 4,496.15. Rupee recovered to 40.60 against dollar from 40.65 in Friday trading. Market indexes opened higher at the opening but closed lower in a familiar pattern in the last three months of trading. Political worries dogged traders.

The talks between the ruling coalition government and working committee of left parties agreed to create a framework for negotiations of increasingly controversial nuclear deal between the U.S. and India. External Affairs Minister Pranab Mukherjee is expected to lead the discussion after Sept 19th.

Of the stocks trading on BSE, 1,610 gained, 1,157 declined, and 55 closed unchanged. Daily turnover on the exchange declined to 5,362 crore rupees compared to 4,839 crore rupees in Tuesday’s trading. In trading on National Stock Exchange volume declined to 10,835 crore rupees from 10,856 crore rupees a day ago. Oil price at record level lifted stocks of sugar companies.

Of the 30 stocks in the Sensex, 23 fell and 10 gained. Reliance Energy led the gainers in the index with a rise of 3.6% to 891 rupees. NTPC led the decliners in the index with a loss of 3.1% to 189 rupees.

Securities and Exchange Board of India permitted as collateral securities rated AAA from foreign investors for derivative positions and trading. The move by Sebi is likely to boost foreign investment.

Reliance Energy jumped after the news that Supreme Court of India has permitted the company to bid for 2,600 crore rupees Mumbai Sea Link project.

Steel Authority of India jumped 1.8% to 174 rupees after the company released plan to expand its current capacity to 26 million tons from 13.5 million tons by the year 2010. The company plans to invest 40,000 crore rupees.

Peninsula Land jumped 2.4% to 533 rupees on the news that it has sold 5,75,000 square feet of land to Alok Infrastructure for 1,050 crore rupees.

Buying in sugar companies lifted the sector but pharmaceuticals and banks faced selling. Record oil price lifted local sugar companies stocks to a new high. Bajaj Hindustan led the sector with a rise of 4.3% to 141 rupees followed by gains in Dwarikesh Sugar of 3.6% to 56 rupees, Balrampur Chini Mills of 3.2% to 65 rupees, and in Shree Renuka of 3.1% to 65 rupees.

3i Infotech added 0.9% to 143 rupees after the company agreed to acquire 26% stake in Taxsmile.com. The internet based provides tax filing and advisory services.

Modern Dairies soared 5% for the second day in a row to 158 rupees ahead of expected stock bonus of one share for every share held.

Nitco Tiles added 2.3% after increasing 4% in the previous session to 245 rupees after the news that the company is venturing to distribute cement from Pakistan via MMTC. The government sole import agency Minerals and Materials Trading Company acts as national conduit for import and export for most commodities import in India.


[R]7:00AM New York, 8:00PM Tokyo - Tokyo shares fell after Prime Minister Shinzo Abe resigned. Japan’s current account surplus rose 4.5% in July, as wholesale price gain 1.9% in August.[/R]

Shares in Japan marginally following a surprise resignation by Prime Minister Shinzo Abe. Tokyo closed down 0.5% in mixed trading submerging yesterday’s 2.4% gain. Of the 225 Nikkei stocks 139 shares dropped, 76 gained and 10 traded unchanged. Of the index shares 47 stocks dropped between 2% and 5% while only 11 shares rose above 2%.

In Tokyo trading Nikkei 225 lost 0.5% 0r 80.07 to 15,797.60 in volatile trade. Investors and businesses alike were concerned by the imminent departure of Prime Minister Abe. Mr Abe announced on Japan television Wednesday he was stepping down to pave way for a new leader that would “fight against terrorism.” The Prime Minister assumed office a year ago and at 52, he was Japan''s youngest post-war head of government. His support had dwindled, however, following a row over pensions and a series of financial scandals involving cabinet ministers. On September 19, the ruling Liberal Democrats will meet to elect a new leader who is also likely to be the next leader of the country.

The Finance Ministry said today Japan’s current account surplus increased 4.5% in July to 1.9 trillion yen from a year ago, expanding for the seventh straight month. The balance of trade in goods and services reported a surplus of 458.8 billion yen, down 30% on prior month while the surplus in merchandise trade dropped 18% to 784.3 billion yen. The Ministry said imports climbed at a pace of 17% to 5.9 trillion against exports that rose 11.1% to 6.7 trillion yen.

Japan''s wholesale prices rose 1.9% in August from 12 months back, surging for the 4th successive year in a row, the Bank of Japan reported today. The wholesale inflation numbers were fuelled by increases in crude oil, steel, chemical and metal prices, gaining for the fourth month in a row. Meanwhile, A private research firm, Tokyo Shoko Research said that the number of corporate failures rose 3% to 1,203 in August, leaving over 870 billion yen in debts. The company said the rise was partly attributed to the failure of major real estate firm Azabu Buildings Co, which alone left debts of 564.8 billion yen.

Of the Nikkei 225 stocks Hitachi Zosen led decliners falling 4.7% followed by Daiwa Securities Corp down 4.4% Mitsui Sumitomo fell 4.33%, Chugai Pharmacy lost 3.9% while home decorator Toto Ltd closed lower 3.6%. Financial stocks dropped as well. Mizuho Trust and Banking Co dragged 3.2%, Sumitomo Mitsui down 2.9%. Resona Holdings and Mizuho Financial lost 2.9% and 2.4%.

Of the Nikkei 225 index shares, property stocks continued with their recovery for second day running. Inpex Holdings paced gainers rising 5.6% followed by land developer Tokyu Land Corp rising 5.1%. Mitsubishi Electric Corp gained 3.6%, Daiichi Sankyo rose 3% and Nippon Sheet Glass closed up 2.8%. Real estate shares surged. Mistubishi Estate Co added 2.3%, Mitsui Fudosan up 2.3% and Sumitomo Realty climbed 1.8%. Motor shares, Hino Motors Ltd and Nissan Motor Co gained 2.4% and 2.2% respectively. Nippon Oil Corp rose 1.8% on rising oil prices that touched $78 yesterday.

The Social Insurance Agency said this week about 5.24 million of the 50 million public pension accounts in chaos have had no entries of the names of their holders. The finding resulted from the agency''s checking of the unidentified accounts, begun last month, and was reported to the Internal Affairs and Communications Ministry''s panel overseeing the public pension operations and the agency''s activities over the pension record-keeping mess.