UK Stocks Rise, Weak Manufacturing

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

UK stocks rose after traders speculated that global economic growth may revise next year on a large economic stimulus in the U.S., China and India. UK manufacturing dropped 1.8% in three months to October. Latest survey of estate agents shows weak housing market on the lack of home buyers.

[R]1:00PMNew York, 6:00PM London- U.K. manufacturing falls 1.8% in the three months to October. Stocks rose on the hopes that U.S. stimulus package will arrest a decline in global economic growth.[/R]

Stocks in London rose on speculation that the multi-billion-dollar stimulus proposed by U.S. President-elect will help jolt the global economy into recovery. Retailers gained.

In London trading FTSE 100 gained 2.1% or 88.56 to 4,388.62.

Of the FTSE 100 index stocks 74 rose, 27 declined, and one was unchanged. Legal & General Group led advancers in the index shares with a rise of 13.5%.

U.K. Manufacturing Falls 1.8% in three months to October

The Office of National Statistics reported today that the seasonally adjusted output of the production dropped 1.8% in the three months to October from the previous quarter.

However, output for the manufacturing industries slipped 1.4% from September to October.

Chemicals and man-made fibres rose 1.6% in the period.

The ONS said mining and quarrying output dipped 0.7% in the quarter to October from the previous three months and shed 6.6% from the comparable period a year ago.

Output in the sector slid 7.3% dragged by declines in oil and gas production.

Manufacturing output fell 2% in the quarter from the previous three months, with transport equipment industries dropping 4.6%, paper, printing and publishing industries plummeting 3.4% and basic metals & metal products shedding 2.6%.

In addition, manufacturing output fell 3.5% from the comparable year-ago period.

Output of the electricity, gas and water supply industries in the latest three months plunged 0.5%, while energy supply output gained 1.2% in October from September.

Also output in this sector dipped 1.9% from a year earlier.

Weak Home Sales

Royal Institution of Chartered Surveyors reported today that RICS Housing Market Survey showed a continued improvement in price balance.

The seasonally adjusted net balance of surveyors reporting falling rather than rising prices eased to 76.5 from 81 in November.

According to the report, prices are falling on large unsold inventory of homes on estate agents books relative to qualified buyers rather than any surge in distressed selling.

Completed sales per surveyor dropped to 10.6 from 10.9. The inventory of stock on surveyor’s books dropped 80.5 to 78.3.

Stock levels are now 6.4% from a year ago, while the ratio of completed sales to the stock of unsold property in the market also remained broadly stable.

Confidence in the sales outlook however remains positive.

Separately, the Council of Mortgage Lenders reported today that house purchase loans dipped 52% by volume to 39,900 worth £5.5 billion in October.

First-time buyer loans increased 14% to 15,400 from September, while home mover loans rose 14% to 24,500.

Remortgage loans soared 12% by volume to 70,000 worth £9.4 billion and gross lending rose 6% from September but slid 44% from a year earlier to £18.6 billion.

CML director general Michael Coogan said, “Current policy objectives are conflicting and incoherent. The government needs to decide its key priority. The tug of war with lenders being pulled in every direction at once needs to end.”

Gainers & Losers

Legal & General Group led advancers in the FTSE 100 index shares with a rise of 13.5% followed by increases in Stagecoach of 11.9%, in Invensys of 11.4%, in Wolseley of 10.2%, and WPP Plc of 10.1%.

Wolseley rose on expectations that the multi-billion-dollar stimulus plan proposed by U.S. President-elect Barack Obama will help stimulate demand. Kingfisher gained 6.5% as well.

Reckitt Benckise led decliners in the FTSE 100 index shares with a drop of 5.9% followed by losses in Autonomy Corp.of 4.8%, in Rolls Royce of 2.1%, in British Airways of 1.9%, and Petrofac of 1.9%.

Europe Markets Review

In London FTSE 100 Index closed higher 88.56 or 2.06% to 4,388.62, in Paris CAC 40 Index increased 50.32 or 1.55% to close at 3,297.80 and in Frankfurt DAX index higher 63.23 or 1.34% to close at 4,779.11. In Zurich trading SMI increased 26.74 or 0.46% to close at 5,845.56.