UK Output Price Index Up, Stocks Fall

123jump.com Staff
09 Jun, 2008
New York City

UK stocks fell after the release of May producer price index. The index in May surged 8.9% after rising at 7.6% rate in April. Rising input costs forced several manufacturers to raise prices in the domestic market. In addition a private report on home prices indicated that home owners may have to wait till the year 2017 before home prices will recover in the UK. Of the FTSE 100 index stocks, 71 declined and 29 increased.

[R]1:00PM New York, 5:00PM London- UK''s output price index for domestic sales of manufactured products surges 8.9% in May.[/R]

Stocks in London fell after a government report showed that producer prices rose in May. Homebuilders also negatively weighed on market sentiment as another report indicated that homeowners may have to wait until 2017 before average house prices rebound to current levels after falling for the next four years.

Market sentiment

In London trading FTSE 100 fell 0.49% or 29.2 at 5,877.60.

Of the 102 FTSE 100 stocks 29 gained, 71 declined, and 2 were unchanged. Xstrata led advancers in the index shares with a rise of 2.80% after commodities prices increased.

UK’s producer prices rise 8.9% in May

The Office of National Statistics reported on its website today that the output price index for the domestic sales of manufactured products increased 8.9% in the year to May from 7.6% in the year to April.

Unadjusted, the index gained 1.6% from April on the rise in manufactured product prices and petroleum products.

The statistics office also added that the output price index, excluding excise duties, climbed 9.2% from a year ago in May and after seasonal adjustments increased 1.4% from May.

Also the output price index excluding food, beverages, tobacco and petroleum rose 5.9% in the year to May. In seasonally adjusted terms the index increases 1.2% between April and May.

According to the report, the input price index for materials and fuels purchased by manufacturing industry advanced 27.9% in the year to May and increased 3.5% from April. On the overall, prices of imported materials surged 2.7% from April, and seasonally adjusted the input price index increased 3.8% between April and May.

In addition, the input price index for manufacturing excluding the food, beverages, tobacco and petroleum industries increased 13.8% in the year to May and gained 1.2% from April on a seasonally adjusted terms.

Gainers & Losers

Xstrata led gainers in the FTSE 100 index shares with a rise of 2.80% followed by increases in Wood Group of 2.58%, in BP Plc of 2.40%, in Tullow Oil of 2.05%, and BG Group of 1.91%. Xstrata rose after oil prices stayed above $137 a barrel, while Nymex July West Texas crude oil fell $1.50 to $137.02 a barrel. Other commodity stocks increased as well. Royal Dutch Shell gained 1.91% and Anglo America increased 1.32%.

HBOS led decliners in the FTSE 100 index shares with a drop of 7.18% followed by losses in Barclays Plc of 5.70%, in Royal Bank of Scotland of 4.79%, in ITV Plc of 4.74%, and Persimmon Plc of 4.14%.

Homebuilders fell after a report, commissioned by the over-the-counter residential property futures market claimed homeowners will have to wait until 2017 before average house prices rebound to recover to current levels after falling for the next four years.

Home Retail Group slipped 2.83% and Hammerson declined 2.37% after the release of the report.

RBS shareholders take over 95.11% of shares

The Royal Bank of Scotland reported in a statement today that current shareholders have subscribed to 95.11% of the £11.6 billion rights offering. Underwriters UBS, Merrill Lynch and Goldman Sachs will be left with 299.4 million shares worth £600 million to sell on to the market.

The cash call was reportedly at 200 pence, and shareholders who did not take up their rights will be paid for the difference between the offering price and the price at which the underwriters managed to place the shares today.

RBS is seeking to boost its capital after the £56 billion takeover of Dutch bank ABN Amro and £6billion in subprime-related losses.

McDonald’s Corporation, the world''s biggest hamburger chain reported global sales at restaurants open at least 13 months rose 7.7% in May, helped by strong international sales. Same-store sales, a key gauge of retail health, rose 4.3% in the United States.

McDonald''s has said it plans to expand its value offerings this summer, when the majority of its U.S. restaurants will add $1 beverages to their menus.

Same-store sales rose 9.6% in Europe, led by strength in the U.K., France and Russia, and 9.7% in the Asia/Pacific, Middle East and Africa division.

Total system-wide sales jumped 16% for the month ended May 31.

McDonald’s Corporation ((MCD)) stock in the last one year traded as high as $63.69 in December 2007 and as low as $46.64 in January 2008. McDonald’s stock in today’s trading edged $2.08 higher to $59.04.


World markets review

In Tokyo Nikkei 225 Index closed lower 308.06 or 2.13% to 14,181.38, in Malaysia KL Composite index decreased 17.59 or 1.41% closed to 1,230.98. Market of Hong Kong and Australia were closed today.

In South Korea Kospi Index decreased 23.35 or 1.27% to close at 1,808.96, in Thailand SET index closed lower 11.75 or 1.44% to 805.58 and Indonesia JSE Index edged increased 7.84 or 0.33% to 2,410.08. Sensex index in India decreased 506.08 or 3.25% to 15,066.10.

In London FTSE 100 Index closed lower 29.20 or 0.49% to 5,877.60, in Paris CAC 40 Index increased 4.06 or 0.08% to close at 4,799.38 and in Frankfurt DAX index higher 11.82 or 0.17% to close at 6,815.63. In Zurich trading SMI decreased 60.52 or 0.82% to close at 7,325.90.