UK Inflation, Stocks Fall, Global Worries

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

U.K. stocks plunged on weak financial and commodity stocks as global economic recession appear to widen and may take longer and cost more than earlier anticipated. Banks fell on the worries that those with exposure to Eastern European region may suffer more losses.

[R]1:00PM New York, 6:00PM London- U.K. consumer price index eases to 3% in January from 3.1% in December. Royal Bank of Scotland slashes bonuses to £175 million in 2009.[/R]

U.K. stocks plunged on weak financial and commodity stocks as global economic recession appear to widen and may take longer and cost more than earlier anticipated.

In London trading, FTSE 100 index fell 2.4% or 100.62 to 4,034.13.

Of the FTSE 100 index stocks, 10 increased, 91 declined, and one was unchanged. Randgold Resources Ltd. led gainers in the index shares with a rise of 7.5%.

U.K. Consumer Price Index Eases to 3% in January

Office of National Statistics reported today that the country''s consumer price index eased 3% in January from 3.1% a month ago, while the retail price index fell to 0.1% in January from 0.9% in December.

Consumer price inflation slowed by 0.1% as falling transport costs, housing and household services were offset by increases in other areas.

The largest downward contribution was from transport costs where the average price of petrol dropped by 2.9 pence per liter to 86.3 pence between December and January. Diesel prices in the period dropped 4 pence per liter to 98.4 pence.

However there were large upward contributions from furniture, household, equipment and maintenance; alcoholic drink; and miscellaneous goods and services.

The ONS said RPIX inflation – the all items RPI (retail price index) excluding mortgage interest payments – was 2.4% in January from 2.8% in the previous month.

Royal Bank of Scotland to Slash Bonuses to £175million in 2009

TimesOnline reported that the Royal Bank of Scotland confirmed today that it has reached an agreement with union Unite for staff on non-managerial grade under which they will be a pay freeze in 2009 for directors and executives worldwide, especially for most staff in the US and for those staff in the Global Banking & Markets division.

Other staff members will be paid below inflation pay rises.

RBS forecasted that the measure will reduce the cost of its bonus payment to £175 million in 2009, 90% lower from 2008.

In addition, the Profit Share ''bonus'' scheme for staff- worth 10% of annual salaries- will not be paid for 2008 and will be terminated for all future years.

However an equivalent payment will be made as part of the existing monthly award package to staff below managerial grade — whose average annual salary is £18,979 — beginning in 2009.

Gainers & Losers

Randgold Resources Ltd. led advancers in the FTSE index shares with a rise of 7.5% followed by increases in Intercontinental of 2.6%, in Legal & General Group of 2.3%, Scottish & South of 1.7%, and Royal Bank of Scotland of 1.5%.

RBS rose after confirming today that it will effect a pay freeze on executive and managerial pay.

Hammerson led decliners in the FTSE 100 index shares with a decline of 9.3% followed by losses in Standard Chartered of 8.9%, in Eurasian Natural of 8.9%, in Lloyds Banking of 8.7%, and Land Securities of 8.5%.

Commodity stocks dropped. Xstrata shed 7.1% and Kazakhmys slipped 6.2%.