Financials, Miners, Commodities Surge

123jump.com Staff
16 Apr, 2008
New York City

UK stocks surged after rally in the U.S. stocks, lower than expected unemployment and possible help from the Bank of England to ease credit markets. Rise in crude oil and precious metals prices helped miners to recover. BHP, Rio Tinto and Antofagasta led the gainers. HSBC, Royal Bank of Scotland and Barclays rose after the earnings report from JP Morgan met analysts expectations. FTSE 100 gained 2.36% or 139.3 to 6,046.20.

[R]1:00AM New York, 5:00PM London - U.K unemployment rate falls less than forecasted and financials and miners regain investors’ favor.[/R]

Stocks in London rose after a government report showed that unemployment fell less than expected in February. Gains were also driven by rising commodity prices.

Market sentiment

In London trading FTSE 100 gained 2.36% or 139.3 to 6,046.20.

Of the FTSE 100 stocks 90 advanced, 10 declined and 2 were unchanged. Experian Group led advancers in the index with a rise of 11.02% after total sales jumped 21% against market estimates of 17.5%.

Employment rate increases in the quarter to February

The Office of National Statistics reported today in its Labour Market Statistics for April that the working age employment rate increased 0.2% in the quarter to February at 74.9% and the number of people employed rose by 152,000 over the quarter.

Also the unemployment rate was 0.1% lower than the previous quarter at 5.2% and the number of unemployed people fell by 39,000 over the quarter.

According to the ONS, total number of unemployed increased to 794,300 at the end of March, down 1,200 from the previous month, while the number of vacancies rose 12,000 from the previous quarter to 687,600.

ONS also reported that the number of people in full-time employment increased 99,000 from the three months to November 2007 to 21.95 million in the three months to February. Of the total, 14.11 million were men and 7.84 million women.

Part-time employment increased by 54,000 from the previous quarter to 7.55 million in the three months to February 2008.

In addition, claims for jobless benefits fell 1,200 from February, which was less than the 1,800 previously forecasted.

Lenders warn Prime Minister Brown

The Financial Times reported today that bankers warned British Prime Minister Gordon Brown at a Downing Street summit yesterday that the severity of the credit market turmoil will prompt small lenders to stop offering new mortgages.

Bank executives also stressed that there was need for the government to move expeditiously to protect small lenders, according to the report in the FT.

Brown has intimated that the government is willing to intervene and the Bank of England is reportedly close to finalizing the terms of such an intervention, a development that might see the central bank taking over “mortgage loans that are stuck on banks’ balance sheets to break the logjam in the money markets”.

Under the proposed plan, which is subject to government approval, the bank will swap securities backed by government bonds for a period of one to three years.

Gainers & Losers

Experian Group led advancers in the FTSE index shares with a rise of 11.02% followed by increases in Royal Bank of Scotland of 7.60%, in Alliance & Leicester of 6.68%, in Barclays Plc of 6.68%, and Eurasian Natural of 6.35%.

Experian Group rose after robust sales at 21% helped earnings beat market estimates.

Financial stocks also gained after JP Morgan Chase first quarter profits were in line with analyst expectations, net income fell 50% to $2.4 billion. The bank wrote down assets worth $5.1 billion.

Energy stocks climbed as crude oil prices rose to a record $114.95 per barrel. Rio Tinto surged 6% on the speculation that BHP may hike its $155 billion takeover bid, BHP rose 5.37% and Kazakymys Plc increased 3.58%.

Legal & General Group led decliners in the FTSE 100 index shares with a drop of 4.89% followed by losses in BAE Systems Plc of 2.35%, in Smith & Nephew of 1.94%, in Friends Provident Plc of 1.35%, and Diageo Plc of 0.66%.