UK Stocks Rise, Nationwide Lending Falls

123jump.com Staff
10 Nov, 2008
New York City

UK stocks edged higher after miners and energy companies rallied. Metals and crude oil prices rose after China announced a $585 economic stimulus plan. Pound gained against dollar to $1.57 and against euro dropped to 82.09 pence. HSBC loan losses rise. Cable & Wireless revenue fell 5%.

[R]1:00PM New York, 6:00PM London - U.K. producer prices drops 6.8% in October. HSBC provisions $4.3 billion in Q3. Resource stocks rallied on China $585 billion stimulus package.[/R]

Stocks in London rose 0.9% leveraged by commodity stocks after China announced a stimulus package of Rmb 4 trillion or $585 billion. However gains were offset by retail and realty stocks on weak earnings from HSBC.

In London trading FTSE 100 rose 0.9% or 38.96 to 4,403.92.

Of the FTSE 100 index stocks 62 increased, and 40 declined. Anglo America led advancers in the index shares with a rise of 11.6% after metal prices advanced on expectations of resurgent global demand.

U.K Producer Prices Ease to 6.8% in October

The Office of National Statistics reported today that the country''s producer prices for home sales of manufactured products fell to 6.8% in the year to October from 8.5% in the year to September.

However prices dropped 1% between September and October on falling petroleum and other manufactured products.

Also the output price index excluding excise duties rose 7% in the year to October but fell 1% between September and October.

The output price index excluding food, beverages, tobacco and petroleum rose 4.9% in the year to October, while the index fell 0.5% between September and October.

The input price index for materials and fuels purchased by manufacturing industry increased 13.8% in the 12 months to October but declined 5.6% between September and October as crude oil prices declined.

Prices of imported materials as a whole slid 2.3% between September and October.
ONS said the input price index for manufacturing industry excluding the food, beverages, tobacco and petroleum industries advanced 14.5% year-on-year.

China Announces Rmb4 trillion Stimulus

China unveiled $585 billion in stimulus package focused at banking sector, farmers and small manufacturing companies that are taking the biggest brunt of the current economic slowdown. China plan will dedicated unspecified amount for infrastructure development.

The central bank in China last month relaxed loan standards for bank loans by removing caps on how much banks can lend and in the last two months lowered interest rate three times. The weekend announcement by China lifted markets in Asia and resource stocks in European trading.

Gainers & Losers

Resource stocks ArcelorMittal, BHP Billiton, Rio Tinto, Antofagasta and Xstrata surged more than 10% in Europe and stocks closed sharply higher in Australia.

Anglo America led advancers in the FTSE 100 index shares with a rise of 11.6% followed by increases in Xstrata of 11.5%, in BHP Billiton of 10.6%, in London Stock Exchange of 10.2%, and Wood Group of 10.2%.

Commodity stocks rose after crude oil delivery for December delivery soared 5% to $61 per barrel. Copper futures increase 7.5% and gold prices gained $12 to $746 per ounce.

Rio Tinto gained 8.6%, Antofagasta soared 6.3%, Vedanta Resources increased 5.1% and Kazakhmys rose 4.6%.

Kingfisher Plc led decliners in the FTSE 100 index shares with a fall of 6.1% followed by losses in Tesco of 5.9%, in Standard Chartered of 4.7%, in Royal Bank of Scotland of 4.7%, and Next of 4%.

Other retailers fell. Marks & Spencer dropped 1.7% and Sainsbury shed 2.3%.

Realty stocks declined as well. Hammerson fell 3% and British Land Co. dipped 2.3%.

Earnings Review

HSBC reported that loan impairment charges in the U.S. rose to $4.3 billion in the third quarter on higher provisions for credit losses in consumer lending real estate secured portfolio and the card portfolio.

The U.S. mortgage portfolio declined by $2.5 billion in the third quarter and $7.2 billion in the three quarters ended September 30 to $29 billion.

Cable & Wireless plc, an international telecommunications company said first-half revenues increased 5% to £1.6 billion from £1.5 billion a year earlier. Net profit in the first-half fell 14.1% to £115 million or 3.3 pence per diluted share compared to net profit of £134 million or 4.2 pence per share, a year earlier.

Cable & Wireless plc, in the last one year traded as high as 196.38 pence in December 2007 and as low as 107.80 pence in October 2008. Based on the Friday’s closing price the company has a market cap of £3.62 billion.

Nationwide Building Society said first-half revenues rose 2% to £1,065 million from £1,046 a year earlier. Net profit increased 14% to £270 million compared to net profit of £236 million, a year earlier.

Europe Markets Review

In London FTSE 100 Index closed higher 38.96 or 0.89% to 4,403.92, in Paris CAC 40 Index increased 36.63 or 1.06% to close at 3,505.75 and in Frankfurt DAX index higher 87.07 or 1.76% to close at 5,025.53. In Zurich trading SMI increased 82.46 or 1.37% to close at 6,090.62.