UK Stocks Drop 6%

123jump.com Staff
01 Dec, 2008
New York City

UK stocks declined 6% after weak manufacturing and housing market reports. Manufacturing activities index declined the most in 16 years. UK home prices drop to the level last seen in 2006. Miners declined on the worries that BHP and Rio Tinto will be forced to cut iron ore prices.

[R]1:00PM New York, 6:00PM London- U.K. manufacturing activity drops 34.4 in November. U.K. house prices plunge 8.1% in November.[/R]

London market averages tumbled on a raft on negative reports on weak housing market and manufacturing. House prices dropped 8.1% in November and U.K manufacturing activity fell the most since 1992.

In London trading FTSE 100 index fell 5.8% or 249.56 to 4,038.45.

All stocks in FTSE 100 index stocks declined. Lonmin Plc led decliners in the index shares with a drop of 18.3% followed by Kazakhmys falling 16.5% as metal prices plunged on news that Rio Tinto and BHP will reduce contract prices of coking coal and iron ore.

Manufacturing Activity Fell November

Chartered Institute of Purchasing and Supply reported today that the CIPS/Markit Purchasing Managers'' Index activity in the U.K. manufacturing sector dropped 34.4 in November from 40.7 in October, falling the most since 1992.

New orders taken by manufacturers declined to 29.7 in November from 37.8 in October on ongoing downturn, credit restrictions, and problems in the automotive, construction, consumer and financial sectors.

The weaker pound hasn’t been able to motivate buyers from overseas as new export orders stood at 37.1 from 43.5 the previous month. Staff levels also fell to 35.7. Input prices fell for the first time in more than three years to 44.2 last month from 55.6 in October. 55.6.

House Prices Fall 8.1% in November

Property consultant Hometrack reported that house prices in England and Wales dropped 1.1% in November from the previous month and fell 8.1% to £161,400 from a year earlier, to the level last seen in January 2006.

It took 11.8 weeks on average to sell a home compared with 11.9 weeks in October, while sellers achieved 88.9% of their asking prices compared with 89.2% a month ago.

London home prices have fallen the most over the past year at 9.5%.

Director of research at Hometrack Richard Donnell said, “All the indicators from the latest survey point to a continued fall in property prices in the short term. A weak economic outlook and limited availability of mortgages are set to keep prices under downward pressure in 2009.”

Gainers & Losers

Lonmin Plc led decliners in the FTSE 100 index shares with a fall of 18.3% followed by Kazakhmys Plc of 16.5%, in Fresnillo of 15.6%, in Vedanta Resources of 15.6%, and Anglo America of 14.5%.

Commodity stocks shed on worries that recession fears will deepen after news that Rio Tinto and BHP Billiton may have to cut contract prices for iron ore and coking coal as demand weakens.

Gold prices lost $40 to $778.500 an ounce, copper slipped to $1.6295 per pound and crude oil prices tumbled $3.40 to $51 per barrel. Eurasian Natural plummeted 14.11%, Xstrata dipped 12.5% and Rio Tinto declined 11.4% as a result.

Europe Markets Review

In London FTSE 100 Index closed lower 222.52 or 5.19% to 4,065.49, in Paris CAC 40 Index decreased 182.25 or 5.59% to close at 3,080.43 and in Frankfurt DAX index lower 274.65 or 5.88% to close at 4,394.79. In Zurich trading SMI decreased 289.02 or 4.97% to close at 5,527.58.