Commodites Drag UK, Financials Drop in Europe

123jump.com Staff
05 Sep, 2008
New York City

UK stocks fell 2.3% after commodities and crude oil prices in the region declined. Informa rejected a lowered offer from a consortium of private equity investors and held out for a higher offer. The troubled mortgage lender HBOS plc is exploring a possible sale of its Australian units. Johnson Matthey led decliners in the FTSE 100 index shares with a fall of 8.5% followed by losses in Kazakhmys Plc of 8.2%, in Eurasian Natural of 7.6%, in Ferrexpo Plc of 7.1%, and Antofagasta of 7%.

[R]3:00PM New York, 8:00PM London- Commodity stocks lead benchmark index lower by 2.3%. HBOS mulls selling Australian unit. Informa rejects lower bid from a consortium.[/R]

London stock indexes fell led by commodity stocks as worries heightened that the weakening global economic conditions will ultimately affect demand for raw materials.

Market Sentiment

In London trading FTSE 100 slipped 2.26% or 121.4 to 5,240.70. Of the 102 FTSE 100 stocks 8 rose, 93 declined, and 1 was unchanged. RSA Insurance Group led advancers in the index shares with a rise of 2.84%.

U.S. Unemployment Rises 6.1% in August

The U.S. Department of Labor reported that the unemployment rate surged the most in five years to 6.1% in August from 5.7% in July after employers slashed 84,000 jobs. Economists surveyed by 123jump.com had earlier forecasted that the unemployment rate would increase to between 5.7% and 5.8%.

Job losses were experienced in every sector, with manufacturers eliminating 61,000 jobs and service businesses cut 27,000 jobs.

Since the beginning of the year 605,000 jobs have been lost and more than 2 million jobs have been lost in the last two years. Average work per week stood at 33.7 hours and average hourly earnings edged up 0.4% to $18.14. The report also noted that 100,000 jobs were lost in June on a weak labor market, a continued housing slump and a tighter credit markets.

HBOS Plc Mulls Selling Australian Unit

Bloomberg News reported today that HBOS plc advisers has held informal discussions with the National Bank of Australia and Commonwealth Bank of Australia as it mulls selling its Australian subsidiary that includes BankWest , Capital Finance Australia Ltd. and St. Andrew''s Australia for an estimated $5.7 billion.

According to the report, the mortgage lender might come up with a final position before the end of the year.

HBOS has to date been plagued by £1.1 billion in write-downs from the worsening conditions on the credit markets.

Gainers & Losers

RSA Insurance Group led advancers in the FTSE 100 index shares with a rise of 2.84% followed by rises in Cadbury of 2.25%, in Wood Group of 0.92%, in Unilever Plc of 0.63%, and Hammerson of 0.55%.

Johnson Matthey led decliners in the FTSE 100 index shares with a fall of 8.51% followed by losses in Kazakhmys Plc of 8.15%, in Eurasian Natural of 7.63%, in Ferrexpo Plc of 7.07%, and Antofagasta of 7.03%.

Other commodity stocks also fell on worries over the global economy. Vedanta Resources slipped 4.55%, Xstrata lost 5.59%, and Anglo America fell 5.19%.

Informa Plc Rejects Takeover Bid

Informa Plc reported on its Web site yesterday that it has rejected a bid by a consortium comprising of Providence Equity LLP, The Carlyle Group and Hellman & Friedman to acquire the company for 450 pence per share in cash. Another consortium of most of the members of the current group had offered 506 pence per share before the current due diligence.

The publisher of shipping rate and route digest Lloyd’s List, Datamonior, International Freight Weekly and Cargo Systems rejected the offer and held out for a higher offer. Earlier last year the company rejected an offer of 630 pence from Springer Science and Business. The subscription to the publication are 60% of publishing revenue and 44% of total revenue the company feels that despite difficult market conditions ahead this revenue is unlikely to decline substantially.

Europe Markets Review

In London FTSE 100 Index closed lower 121.40 or 2.26% to 5,240.70, in Paris CAC 40 Index decreased 107.35 or 2.49% to close at 4,196.66 and in Frankfurt DAX index lower 152.13 or 2.42% to close at 6,127.44. In Zurich trading SMI decreased 108.06 or 1.53% to close at 6,976.59.