UK Deficit Widens to

123jump.com Staff
11 Mar, 2009
New York City

U.K. stocks tumbled 0.6% after trade deficit soared more-than-forecasted in January on weakening demand. Deficit on trade in goods is provisionally estimated to have widened to

[R]1:00PM New York, 6:00PM London- U.K. trade deficit widens to £7.7 billion in January.[/R]

U.K. stocks tumbled 0.6% after trade deficit soared more-than-forecasted in January on weakening demand.

Energy stocks also declined as crude oil prices lost 94 cents to $44.8 per barrel.

In London trading FTSE 100 index fell 0.6% or 21.42 to 3,693.81.

Of the FTSE 100 index stocks, 55 increased, 44 declined, and 4 were unchanged. Legal & General Group led gainers in the index shares with a rise of 8.2% followed by Aviva Plc gaining 8.2%.

U.K. Trade Deficit Widens to £7.7 billion

Office of National Statistics reported today that the country’s deficit on trade in goods is provisionally estimated to have widened to £7.7 billion in January from £7.2 billion the previous month.

Economists had earlier forecasted that the deficit will increase to £7.4 billion.

Deficit with the EU countries in January eased to £2.0 billion, compared with £2.9 billion a month earlier, while the deficit with non-EU countries increased to £5.7 billion from £4.3 billion in December.

According to the ONS, total exports of goods dropped 4% to £18.8 billion and total imports of goods dipped 1% to £26.5 billion.

In the period exports to EU increased by 4% and those to non-EU countries fell by 16%.

Imports from EU countries slipped 1.5%, while those from non-EU countries fell by 0.5%.

The report also notes that deficit on trade in goods eased by £0.3 billion to £22.8 billion in the three months to December.

The deficit with EU countries narrowed by £1.4 billion to £7.5 billion, and the deficit with non-EU countries soared by £1.1 billion to £15.4 billion.

In the January quarter exports of goods fell by 9.5% and imports of goods fell by 7% as exports to EU countries fell by 7% and exports to non-EU countries fell 12%.

Imports from EU countries declined 9% and those from non-EU countries fell by 5.5%.

Bank of England Gets £10.5 billion Bids

Times Online reported today that the Bank of England was swamped by bids that totaled £10.5 billion for an initial £2 billion of the freshly ''printed'' money.

The BoE plans to inject £75 billion into markets through its Asset Purchase Program.

Non-financial institutions showed little interest in the central bank’s morning auction.

After last week’s announcement by the apex bank to resort to quantitative easing to try an unfreeze the markets, the benchmark ten-year bond yields fell to a record 2.95% and sterling swap rates- used to calculate fixed-term mortgage rates- have also declined.

Gainers & Losers

Legal & General Group led gainers in the FTSE 100 index shares with a rise of 8.2% followed by gains in Aviva Plc of 8.2%, in Man Group of 8%, in Wolseley of 7.3%, and
Xstrata of 7.1%.

Resources stocks increased as gold prices advanced $4.2 to $901 per ounce. Anglo America rallied 5.9% and BHP Billiton increased 5.2%.

Lloyds Banking led decliners in FTSE 100 index shares with a fall of 12.4% followed by losses in Land Securities-NPR of 11.4%, in Tullow Oil of 6.7%, in HSBC Holdings of 6.3%, and Centrica Plc of 6%.

Europe Markets Review

In London FTSE 100 Index closed lower 21.42 or 0.58% to 3,693.81, in Paris CAC 40 Index increased 10.52 or 0.39% to close at 2,674.20 and in Frankfurt DAX index higher 27.12 or 0.70% to close at 3,914.10. In Zurich trading SMI increased 64.42 or 1.43% to close at 4,576.97.