FTSE 100 Rises 1.9%

123jump.com Staff
07 Jul, 2008
New York City

Stocks in UK fell despite a government report that showed UK manufacturing unexpectedly fell in the three months to May as machinery and equipment industries lost ground. In addition, a report released today by KPMG and the Recruitment and Employment Confederation indicated that permanent staff placements fell the most in five years.

[R]1:00PM New York, 6:00PM London - UK manufacturing index drops 0.5% in three months to May.[/R]

Stocks in UK fell despite a government report that showed UK manufacturing unexpectedly fell in the three months to May as machinery and equipment industries lost ground. In addition, a report released today by KPMG and the Recruitment and Employment Confederation indicated that permanent staff placements fell the most in five years.

Commodity stocks, however, drove the market upwards on speculations that the stocks were oversold in the previous trading sessions.

Market Sentiment

In London trading FTSE 100 rose 1.85% or 99.9 at 5,512.70.

Of the 102 FTSE 100 stocks 89 gained and 13 declined. First Group Plc led advancers in the index shares with a rise of 7.19% followed Ferrexpo Plc rising 6.86%.

UK Manufacturing Index Falls 0.5% in Quarter to May

The Office of National Statistics reported on its Web site today that the seasonally adjusted chained volume index for the output of production industries plummeted 0.5% in the quarter to May from the previous quarter.

Similarly, output for manufacturing industries between April and May fell 0.5% from the previous three months as output in the machinery and equipment industries dropped 1.5%.

ONS noted that in the three months to May mining and quarrying output shed 1.6% from the previous quarter and was 5.7% from the comparable period a year ago. However, between April and May output in the sector advanced 0.7% driven by increases in oil and gas production.

In the quarter under review, manufacturing output slumped 0.2% from the previous quarter as there was a fall in output of 3.5% in the manufacturing industries. Also, manufacturing output in the quarter to May was 0.1% lower than the same period a year ago.

Permanent Staff Demand Falls in June

The Recruitment and Employment Confederation reported on its Web site today that according to June’s Report on Jobs from the REC and KPMG permanent placements continued to plummet and temp billings rose at the weakest pace in five months as firms’ demand for staff contracted for the first time in five years.

But inflation of wages and salaries increased irrespective of the firm rise in candidate availability.

Kevin Green, the REC''s Chief Executive said: “This is the first major sign that a slowing economy is starting to have an impact on jobs. The decline in the demand for permanent staff for the first time in five years indicates that employers are hesitating before making recruitment decisions.

“The continuous growth of temporary recruitment shows that this is being used to meet peaks and troughs in business workloads. We anticipate that in this worsening economic climate, businesses will go to great lengths to retain the staff that they have worked hard to acquire in the last few years.

""It’s also vital that jobseekers keep in mind that there are still numerous positions to fill and recruitment agencies will be working hard to search for the right talent to meet employers’ needs.”

Gainers & Losers

First Group Plc led advancers in the FTSE 100 index shares with a rise of 7.19% followed by increases in Ferrexpo Plc of 6.86%, in Carphone Warehouse of 8.15%, Rolls-Royce Group of 5.22%, and Invensys Plc of 5.20%.

Commodity stocks also gained despite Brent crude oil falling by $1.52 to $142.90 a barrel on speculation that the stocks were oversold in the last trading sessions. Royal Dutch Shell-A edged up 4.03%, Tullow Oil spiked 3.95% and BP advanced 3.72%.

Marks & Spencer led decliners in the FTSE 100 stocks with a fall of 4.41% followed by losses in Royal Bank of Scotland of 2.55%, in ITV of 2.35%, in Friends Provident 2.33%, and Next Plc of 1.95%.

Marks & Spencer fell after the The Sunday Times reported yesterday that shareholders owning 30% of the company’s stock will vote against Stuart Rose as the executive chairman. Other retailers fell as well. Kingfisher dropped 1.11% and Whitbread slipped 1.84%.