UK Stocks Fall, Xstrata Net Up 13%

123jump.com Staff
03 Mar, 2008
New York City

UK stocks fell on the weakness in European trading and economic worries. HSBC reported 21% rise in earnings but issued a cautious outlook for 2008. Several brokers lowered earnings outlook for Goldman Sachs, Merrill Lynch, Bear Stearns, and Lehman. HSBC reported 2007 earnings rise of 21% to $19.2 billion. Xstrata reported 2007 earnings rise of 13% to $5.54 billion on sales rise of 12% to $28.5 billion.

[R2:00PM New York, 7:00PM London – Lowered earnings outlook for financial brokerage companies, lower than expected earnings from HSBC, and weak sentiment in European trading, dragged London market lower./R]

Stocks in London ended lower led by financial stocks as deepening losses caused by the global credit markets gnawed at corporate profits. However, rising commodity prices and a strong earnings growth from Xstrata helped trim losses.

Market Sentiment

In London trading FTSE 100 declined 1.12% or 65.7 to 5,818.60.

Of the 102 FTSE 100 stocks 16 gained, 84 dropped and 2 were unchanged. HSBC led advancers in the FTSE 100 stocks with a rise of 3.13% after reporting that profit attributable to shareholders of the parent company grew 21% to $19 billion from $15 billion a year ago.

HSBC gains on emerging markets

HSBC reported today that the company’s total operating income rose by 25% to $87 billion from $70 billion buoyed by strong growth in the Asia-Pacific region where profits advanced 24.8% to $6 billion from $3.5 billion a year earlier.

Profit before tax in Europe also increased 35.5% to $8.5 billion from $ 6.9 billion. Also profits in Hong Kong grew 30.3% to $7.3 billion.

On the overall, gains in the developing markets helped to offset loan impairment charges and risk provisions that increased by 79% to $11.7 billion.

The lender strategically positioned itself through acquiring a 51% stake in Korea Exchange Bank and increased its interest in Techcombank to 15% in Vietnam.

Xstrata still in negotiations with CVRD

Xstrata reported today in a statement accompanying its 2007 annual results that the company is still in talks with Vale, the Brazilian iron ore mining company, which has made $85 billion for Xstrata.

The company however said in the year ended December 31st that profit increased 13% to $5.54 billion from $4.89 billion as outputs of coal increased from Southern Peru by 31% to 1.6 billion tons and nickel grow 9.8%. Sales jumped 12% to $28.5 billion.

Gainers & Losers

HSBC Holdings Plc led advancers in the FTSE 100 stocks with a rise of 3.13% followed by gains in Compass Group of 1.76%, in Sage Group of 1.39%, in Lonmin Plc of 1.36%, and in Rolls-Royce Group of 1.32%.

Other commodity stocks also rose as well as Xstrata’s profits advanced 13%. Antofagasta Plc increased 0.74% and Kazakhmys grew 1.16%.

HBOS Plc led decliners in the FTSE 100 stocks with a drop of 7.54% followed by losses in Alliance & Leicester in 6.74%, in Friends Pro Plc of 4.87%, in Aviva Plc 4.42%, and in Cairn Energy of 4.38%.

Aviva Plc declined after the Sunday Telegraph said the company might sell of its Indian back office business.

Other financial stocks fell as well. Royal Bank of Scotland fell 4.1%, Barclays shed 3.20% and Old Mutual declined Plc of 2.95%.

Company News

Kingspan Group Plc reported today full-year net income rose to 187.3 million euros from 151 million euros, while sales increased 27% over last year to 1.86 billion euros.

Revenues from the U.K. advanced 26% to 1.04 billion euros.

World Markets Indexes

In Tokyo Nikkei 225 Index closed lower 610.84 or 4.49% to 12,992.18, in Hong Kong Hang Seng index decreased 746.70 or 3.07% closed to 23,584.97. Australia ASX 200 index decreased 166.30 or 2.98% to close 5,405.80.

In South Korea Kospi Index decreased 39.89 or 2.33% to close at 1,671.73, in Thailand SET index closed lower 2.84 or 0.34% to 842.92 and Indonesia JSE Index edged decreased 69.63 or 2.56% to 2,652.31. Sensex index in India decreased 900.84 or 5.12% to 16,677.88.

In London FTSE 100 Index closed lower 65.70 or 1.12% to 5,818.60, in Paris CAC 40 Index decreased 48.00 or 1.00% to close at 4,742.66 and in Frankfurt DAX index lower 58.18 or 0.86% to close at 6,689.95. In Zurich trading SMI decreased 129.98 or 1.73% to close at 7,403.88.