Tullow Oil Surges, Service Index Falls

123jump.com Staff
06 May, 2008
New York City

UK stocks closed nearly unchanged after the service index in April fell to a five year low. Of the 102 FTSE 100 stocks 26 gained, 74 declined and 2 were unchanged. Tullow Oil led advancers in the index shares with a rise of 24% after crude oil prices jumped to $122 per barrel, boosted by further supply disruptions. British Land fell after Morgan Stanley lowered its rating on the company.

[R]1:00PM New York, 5:00 London – The index of service sector dropped to the lowest in five years.[/R]

Stocks in London ended flat after gains by commodity stocks, which were spurred by a record leap in crude oil prices, was offset by declines by homebuilders.

In London trading FTSE 100 was flat and declined 0.3 to close at 6,215.20.

Of the 102 FTSE 100 stocks 26 gained, 74 declined and 2 were unchanged. Tullow Oil led advancers in the index shares with a rise of 24% after crude oil prices jumped to $122 per barrel, boosted by further supply disruptions.

Service sector activity drops to lowest in five years in April

The Chartered Institute of Purchasing and Supply and the research group NTC said today their index of service sector activity dropped to the lowest in five years to 50.4 in April from 52.1 in March on heightening credit market losses. Economists were looking for the index to be at 51.7

The index is based on responses from about 700 service companies.

In addition, a measure of input prices increased to 67.3 in April, from 66.2 a month earlier, the highest since 1996, while the index of prices charged by services companies slumped to 55.2 from 56.2 the previous month.

Gainers & Losers

Tullow Oil led advancers in the FTSE 100 index shares with a rise of 24.14% followed by increases in BG Group of 7.06%, in Vedanta Resources of 4.93%, in Cairn Energy of 4.88%, and in Rio Tinto of 4.06%.

Tullow Oil gained after oil surged for the second day in a row to a record $122 a barrel supported by supply disruptions and the speculation that demand will remain high despite record oil prices.

Other commodity stocks rose as well Kazakhmys Plc advanced 3.95%, BHP Billiton increased 3.84%, Xstrata gained 2.70% and Anglo America Plc edged up 1.91%.

Shire Plc led decliners in the FTSE 100 index shares with a drop of 4.62% followed by losses in Home Retail Group of 4.41%, in British Airways of 3.92%, in Next Plc of 3.84%, and London Stock Exchange of 3.82%.

Home Retail Group and other homebuilders fell after Bovis Homes Group Plc Chief Executive Officer Malcolm Harris said in an interview with Bloomberg News that the first half profit will be markedly lower on 30% decline in orders. Cancellation rates are reportedly on the rise and sales volumes may be lower than the target.

British Land Co fell 3.4% after Morgan Stanley cut its recommendations on the shares to ``underweight'''' and said it was shifting from U.K. property stocks to continental Europe.

British Airways Plc after Deutsche Bank AG said “airlines are not doing enough to counter the challenge of fuel costs.''''

Company news

Lloyds TSB Group reported today in its Interim Management Statement on its Web site that the bank write downs in the quarter ended March 31st rose to £1.1 billion on losses on credit-related assets and added that house prices will drop 10% by 2009.

World markets review

In Hong Kong Hang Seng index increased 78.18 or 0.30% closed to 26,262.13. In Australia ASX 200 index lower 28.90 or 0.50% to close 5,701.40. In Malaysia KL Composite index increased 1.48 or 0.12% closed to 1,276.09. Market of Tokyo was closed today.

In South Korea Kospi Index increased 10.79 or 0.58% to close at 1,859.06, in Thailand SET index closed higher 2.68 or 0.32% to 845.83 and Indonesia JSE Index edged decreased 16.16 or 0.68% to 2,371.83. Sensex index in India decreased 117.89 or 0.67% to 17,373.01.

In London FTSE 100 Index closed lower 0.30 or 0.00% to 6,215.20, in Paris CAC 40 Index decreased 22.44 or 0.44% to close at 5,040.92 and in Frankfurt DAX index lower 34.98 or 0.50% to close at 7,017.10. In Zurich trading SMI decreased 114.59 or 1.50% to close at 7,543.67.