UK Ouput Drops 1%

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

National Institute for Economic and Social Research noted that the UK output fell 1% in the quarter to November from a revised forecast of 0.8% in the three months to October, as the rate of output decline accelerates. Rio Tinto will expand its divestment program and pay down its $10 billion.

[R]1:00PM New York, 6:00PM London - U.K. output drops 1% in the three months to November. Rio Tinto announces to cut 14,000 jobs.[/R]

Stocks in London fell after country’s output dipped 1% in the quarter to November. Rising commodity stocks helped trim losses.

In London trading FTSE 100 index fell 0.3% or 13.98 to 4,367.28.

Of the FTSE 100 index stocks, 52 rose, and 50 declined. Rio Tinto rose 20.4% after the company reported that it will divest more of its assets in order to pay down $10 billion in debt by the end of 2009.

U.K. GDP Falls 1% in Quarter to November

National Institute for Economic and Social Research reported today that the country’s output fell 1% in the quarter to November from a revised forecast of 0.8% in the three months to October, as the rate of output decline accelerates.

The estimate for the recent three-month period has a standard error of 0.1% to 0.2% point when compared to the first estimate produced by the Office for National Statistics.

Output decline in the fourth quarter of the year is estimated to be larger than 1%.

The NIESR says the government needs to address the availability of bank credit and more interest rate cuts may be necessary.

Rio Tinto to Reduce its Headcount by 14,000

Rio Tinto reported today that it will expand its divestment program and pay down $10 billion of debt by the end of 2009.

The mining group is in discussions with “third parties related to further divestments” which may lead to new capital and reduce capital expenditure.

Rio Tinto will reduce its global headcount by 14,000 comprising 8,500 contractor jobs and 5,500 employees.

Severance costs are estimated to be in $400 million and annual operating cost savings are estimated at $1.2 billion.

Gainers & Losers

Rio Tinto led advancers in the FTSE 100 index shares with a rise of 20.4% followed by increases in Vedanta Resources of 14.7%, in Schroders of 9.3%, in Wood Group of 8.8%, and Antofagasta of 8.1%.

Rio Tinto gained after the company reported yesterday that it will divest more of its assets in order to pay down $10 billion in debt by the end of 2009.

Other commodity stocks also increased. BHP Billiton soared 6.7% and Xstrata Plc advanced 6.6%.

3iGroup Plc led decliners in the FTSE 100 index shares with a drop of 6.2% followed by losses in Standard Chartered of 6%, in Legal & General Group of 5.4%, in Marks & Spencer of 5%, and Cable & Wireless of 4.6%.

Europe Markets Review

In London FTSE 100 Index closed lower 13.98 or 0.32% to 4,367.28, in Paris CAC 40 Index increased 22.51 or 0.68% to close at 3,320.31 and in Frankfurt DAX index higher 25.77 or 0.54% to close at 4,804.88. In Zurich trading SMI decreased 93.65 or 1.60% to close at 5,751.91.