Miners Lift London Stocks, Wolseley Trims

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

UK inflation rate fell to 4.5% in October after rising to 5.2% in September. The drops in fuel and other consumer goods prices helped the index to drop. The inflation is likely to fall further in the rest of the year. Wolseley, the materials distributor plans to eliminate 2,000 staff positions.

[R]1:00PM New York, 6:00PM London – The inflation UK drops to 4.5% in October. Wolseley plans to cut 2,000 jobs in the U.K.[/R]

London stock indexes rose 1.9% after inflation dropped to 4.5% in October, giving the Bank of England more room to maneuver. The inflation is expected to fall below 4% by the end of the year and dip further as low as 3.7% next year.

Financial and commodity stocks trimmed gains on concern over deteriorating financial markets and falling demand.

In London FTSE 100 index increased 1.9% or 76.39 to 4,208.55.

Of the index stocks, 65 rose, 36 declined, and one was unchanged. Antofagasta led advancers in the index shares with a gain of 8.9%.

U.K. Inflation Rate Falls 4.5% in October

Office of National Statistics reported today that the country’s consumer price index fell to 4.5% in October from 5.2% in the previous month, dropping the most in 11 years beating the private estimates of 4.85%. From the previous month prices slid 0.2% from an increase of 0.5% in the previous month.

Transport shaved off 0.5% points from the annual CPI rate. The retail price inflation rate also dropped to 4.2% from 5% in the previous month.

The core inflation declined to 1.9% in October from 2.2% in September.

Wolseley U.K. to Reduce Headcount by 2,000

Wolseley reported in its interim management statement for the three months to October that revenue in the U.K and Ireland fell 10%, while trading profit slid 65%. Overall revenue rose 2% and net profit fell 30%.

During the quarter under review, the company spent £6 million in cutting its staff by 170 to generate annual savings of £8 million.

The company plans to further reduce the staff by 2,000 and close over 200 branches that will reduce annual costs by £80 million.

The company reaffirmed its earlier outlook in a statement, “Given the growing impact of the recent turmoil in the financial markets on the broader world economy and the construction industry, the Group expects the markets in which it operates to continue to deteriorate. However, the overall pattern and scale of current market deterioration is broadly in line with the Group’s expectations at the time of the September outlook statement.”

Gainers & Losers

Antofagasta led advancers in the FTSE 100 index shares with a rise of 8.9% followed by increases in Friends Provident of 8.6%, in Aviva Plc of 8.6%, in Wolseley Plc of 8% and Legal & General Group of 7.5%.

Antofagasta rose after copper prices advanced to $1.6770 per ton.

HBOS Plc led decliners in the FTSE 100 index shares with a fall of 15.4% followed by losses in Lloyds TSB Group of 12%, in Xstrata of 8.7%, in ICAP Plc of 8.6%, and Wood Group of 7.2%.

Financial stocks plunged after Citigroup announced yesterday that it will reduce its headcount by 14% or 52,000 worldwide to 350,000. Royal Bank of Scotland shed 6.7%, Barclays declined 3% and Schroders plummeted 3.8%.

Commodity stocks also fell as crude oil prices dropped $2 to $54.60 a barrel. Vedanta Resources dipped 1.9% and Kazakhmys tumbled 1.2%.