UK Stocks Fall, Sainsbury Lifts Dividend

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

The unemployment rate in the UK jumped to 5.8% in the third quarter to September. The BoE lowered its inflation forecast for the second half. Sainsbury lifted its dividend on higher quarterly profit. Thomson Reuters revenue rose but net fell.

[R]1:00PM New York, 6:00PM London- The unemployment rate in the UK jumped to 5.8% in the third quarter to September. The BoE lowered its inflation forecast for the second half. Sainsbury lifted its dividend on higher quarterly profit. Thomson Reuters revenues rose but net income declined.[/R]

Stocks in London fell after a government report showed that unemployment rose the most in 17 years in September.

In London trading FTSE 100 index fell 1.5% or 64.67 to 4,182.02.

Of the FTSE 100 index stocks 22 rose, 79 declined, and one was unchanged. Vodafone led advancers in the index shares with a rise of 6.1% followed by Scottish & South rising 4.8%.

Unemployment Rate At 5.8%

The Office of National Statistics reported today that the country’s unemployment rate rose 0.4% from the previous quarter and 0.5% from a year earlier to 5.8% in the three months ended September.

Unemployed people rose 140,000 from the earlier quarter and 182,000 from a year ago to 1.82 million.

The employment rate of the working age fell 0.4% from the previous quarter and dropped 0.2% from a year ago to 74.4% or 29.41 million in the quarter to September. However, the total hours worked increased by 0.9 million to 940.9 million.

The claimant count rose 36,500 over the previous month and increased 154,800 from a year ago to 980,900 in October.

The ONS said the redundancy level in the quarter to September rose 29,000 to 156,000, while the inactivity rate for people of working age was 20.9% for the three months to September.

Economically inactive people of working age increased 15,000 over the quarter but fell by 54,000 over the year to 7.89 million. In addition, the annual rate of growth in average earnings excluding bonuses was 3.6% in the quarter under review.

Job vacancies fell 40,000 from the previous quarter and 83,000 from a year ago to 589,000. The largest declines were in distribution, hotels and restaurants falling 16,000 and finance and business services plummeting 10,000.

BoE Revises Inflation Forecast to 2%

The Bank of England Governor Mervyn King said today in the latest inflation report that the outlook for inflation is expected to fall below the 2% target in the second half of next year.

Fourth quarter growth is projected to be much slower than the earlier estimate in August and supply of credit to the real economy has been crimped after the collapse of Lehman Brothers on September 15.

Separately, the central bank governor said the he is prepared to cut interest rates “to whatever level is necessary”.

Gainers & Losers

Vodafone led gainers in the FTSE 100 index shares with a rise of 6.1% followed by increases in Scottish & South of 4.8%, in Thomson Reuters of 4.6%, in Liberty International of 3.8%, and Shire Plc of 3.7%.

Thomson Reuters gained after the company reported that third quarter revenues rose 8% to $3.3 billion on solid performance across its business segments.

Man Group led decliners in the FTSE 100 index shares with a fall of 23.4% followed by losses in Prudential Plc of 12.6%, in Kazakhmys of 10%, in Thomas Cook of 10%, and Autonomy Corp. of 9.5%.

Commodity stocks declined as gold prices fell $16 to $715 per ounce. Crude oil prices also $1.6 to $57 per barrel and copper prices dropped to $ 1.6390 per ton. Anglo America lost 8.4%, Xstrata shed 7.1%, and BHP Billiton plunged 7%.

Earnings Review

Thomson Reuters reported third quarter revenues in the three months ended September rose 8% to $3.3 billion compared to 2007 pro forma third quarter revenues.

Thomson completed the acquisition of Reuters on April 17, 2008.

Diluted earnings per common share were $0.46 and pro forma adjusted earnings per share increased to $0.48 per share.

Revenues in the professional division, legal, tax & accounting, scientific and health rose 10% to 1.4 billion, 7% to $912 million, 31% to $186 million, 8% to $150 million and 2% to $104 million respectively.

The company maintained its annual revenue gains released in May of increase between 6% and 8% and Pro forma underlying profit increase between 19% and 21%. Thomson Reuters will pay a dividend of $0.27 per share on December 15, 2008.

J Sainsbury reported total sales in the 28 weeks ended October 4 rose 7.6% to £10.7 billion from £9.9 billion in the comparable year ago period.

Comparable sales gained 4% from a year ago on nearly 18 million weekly customer transactions.

Profit before tax rose £258 million from £232 million a year ago.

Interim dividend was increased to 3.6 pence per share from 3 pence per share a year earlier. The stock rose 2.8%.

Europe Markets Review

In London FTSE 100 Index closed lower 64.67 or 1.52% to 4,182.02, in Paris CAC 40 Index decreased 102.45 or 3.07% to close at 3,233.96 and in Frankfurt DAX index lower 140.78 or 2.96% to close at 4,620.80. In Zurich trading SMI decreased 177.93 or 3.03% to close at 5,702.86.