London Stocks Drop on Barclays Downgrade

123jump.com Staff
02 Feb, 2009
New York City

UK manufacturing in January declined as domestic orders and export orders weaken. Stocks in London trading dropped after Moodys lowered its rating on the debt rating for Barclays. Barclays dropped 10%. Rio Tinto rose after Chalco showed interest in acquiring minority interests.

[R]1:00PM New York, 6:00PM London - U.K. manufacturing contracts to 35.8% in January. Stocks in London fell after Moody’s cut the rating on debt rating to Barclays.[/R]

London stock indexes fell after a private report showed that manufacturing activity continued to contract in January.

Financial stocks also dropped led by Barclays after Moody''s Investor Services cut the lender''s credit rating to Aa3, citing the bank might experience more write-downs on a deteriorating global economy.

In London trading FTSE 100 index fell 1.7% or 71.86 to 4,077.78.

Of the FTSE 100 index stocks, 7 rose, and 95 declined. Rio Tinto led advancers in the index shares with a rise of 6.6% followed by Autonomy Corp. gaining 2%.

U.K. Manufacturing Contracts in January

Markit Economics reported today that CIPS/Markit purchasing managers index rose to 35.8 in January from 34.9 a month earlier, the third worst reading since 1992.

A reading below 50 shows contraction, while a measure above 50 shows expansion.

The index of employment in manufacturing fell to 33.48 in January from 33.86 in December, new orders were flat, and a measure of backlog of work also plunged.

Senior Economist at Markit Economics Rob Dobson said the employment rate at around 30,000 a month during the three months to December was extremely weak.

The report noted, ‘The principal factors underlying the weak performance of UK manufacturing remained the downshift in global aggregate demand and frozen credit markets. Domestic conditions were especially weak – largely as a result of the crises in the autos, construction, housing and retail sectors.’


Gainers & Losers

Rio Tinto led advancers in the FTSE 100 index shares with a rise of 6.6% followed by increases in Autonomy Corp. of 2%, in AstraZeneca of 0.9%, in GlaxoSmithKline of 0.9%, and Royal Dutch Shell-A of 0.4%.

Man Group led decliners in the FTSE 100 index shares with a fall of Barclays of 10.6%, in Hammerson of 9.4%, in Standard Life of 8.7%, and Royal Bank of Scotland of 7.3%.

European Markets

In London FTSE 100 Index closed lower 71.86 or 1.73% to 4,077.78, in Paris CAC 40 Index decreased 43.87 or 1.48% to close at 2,930.05 and in Frankfurt DAX index lower 67.31 or 1.55% to close at 4,271.04. In Zurich trading SMI decreased 123.09 or 2.33% to close at 5,166.96.