UK Jobless Rate Rises

123jump.com Staff
21 Jan, 2009
New York City

U.K. jobless claims increase 77,900 in December. Barclays plunged 9% on the unsubstantiated rumors that the lender may face nationalization. Banks rebounded in trading after falling sharply in the last three sessions. The Bank of England is likely to purchase assets from banks directly.

[R]1:00PM New York, 6:00PM London- U.K. jobless claims increase 77,900 in December. Barclays plunged 9% on the rumors that the lender may face nationalization.[/R]

London stocks dropped marginally led by Barclays on market rumors that the lender will experience more write-downs and be nationalized. Traders speculated that the bank will release its results earlier than normal schedule.

However Barclays recently forecasted that its earnings estimate will exceed £5.3 billion. The bank is scheduled to announce its results on February 17.

In London trading FTSE 100 index declined 0.8% or 31.52 to 4,059.88.

Of the FTSE 100 index stocks, 51 gained, 50 declined, and one was unchanged. Barclays led decliners in the index shares with a drop of 9.3% on the talk that the lender will realize more write-downs and may be nationalized.

U.K. Jobless Claim Soar 77,900 in December

The Office of National Statistics reported today that the UK jobless claim count rose by 77,900 from the previous month to 1.16 million in December and gained 349,500 from a year ago.

The claims rate increased 0.2 percentage points from November to 3.6% in December and advanced 1.1 percentage points from a year earlier.

The ONS also reported that the working age employment rate declined 0.2 percentage points from the quarter to August to 74.2% in the three months to November, while the employment levels dropped 26,000 from the previous quarter to 29.39 million in the quarter to November.

People in full time employment fell 89,000 to 21.82 million in the three months to November from a quarter earlier, and the number of people in part-time employment gained 63,000 from a quarter earlier to 7.57 million in the November quarter.

The statistics office noted that total hours worked plunged 8.3 million from the three months to August to 935.8 million in the quarter to November.

In addition, the number of people unemployed for over 12 months to November fell 8,000 to 432,000.

Bank of England Might Purchase Assets to Support Lending

The Bank of England Governor Mervyn King said at a CBI Diner in Nottingham yesterday that as key bank rate has been lowered to historic lows, the central bank will consider “unconventional” methods such as buying assets to expand commercial bank reserves and increase credit availability to companies.

According to King, there is scope to reduce the leverage of banks without restricting lending to the real economy.

“The conventional approach to such unconventional measures is to buy assets, such as government securities or gilts, which are traded in liquid markets to boost the supply of money,” said King.

Gainers & Losers

Royal Bank of Scotland led gainers in the FTSE 100 index shares with a rise of 21.4% followed by increases in Standard Chartered of 11.1%, in 3i Group Plc of 7.1%, in Old Mutual of 6.9%, and London Stock Exchange 6.4%.

Energy stocks increased after crude oil prices jumped to $41 per barrel. Xstrata increased 6% and kazakhymys advanced 4%.

Barclays led decliners in the FTSE 100 index shares with a fall of 9.3% followed by losses in Imperial Tobacco of 5.8%, in GlaxoSmithKline of 4.4%, in Reed Elsevier of 3.9%, and Randgold Resources Ltd. of 3.8%.