London Stocks Close Higher; Barclays Soars

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

Shares in London ended in positive territory as impressive gains by Barclays and Land Securities led the rally. Barclays surged on optimism that it was in talks with a prospective buyer of its ETF unit, iShares.

[R]1:00PM New York, 6:00PM London- U.K. households lose £1.9 trillion in global financial crisis. Barclays mulls selling iShares to boost capital.[/R]

U.K stocks rose 2.9% spurred by optimism in the wake of comments by U.S. Federal Reserve chairman Ben Bernanke that the U.S. economy will emerge from its recession at the end of this year.

Investor confidence was also buttressed by news that Barclays is considering selling its iShares business in order to avoid government snapping up a stake in the lender.

In London trading FTSE 100 index increased 2.9%, or 110.31, to 3,863.99.

Of the FTSE 100 index stocks, 89 gained, 13 declined, and one was unchanged. Land Securities led gainers in the index shares with a rise of 29.2% followed by Barclays increasing 22.7% after the lender said it is engaged in talks with potentially interested parties to sale its foreign-traded funds business, iShares.

U.K. Households Lose £1.9 trillion in Global Crisis

PricewaterhouseCoopers reported on Monday that U.K. households lost £1.9 trillion in wealth since July 2007 due to worsening economic conditions in the global financial markets.

Wealth from housing and equities declined by 28%, leading to a cumulative loss of 130% of GDP.

According to the report, with average U.K. prices down 20% from their peak, housing wealth losses are estimated at £800 billion.

The marked slump in global equities is projected to have edged U.K. household wealth loss from equities to £1.1 trillion.

PwC projects that the £1.9 trillion fall in UK wealth will reduce annual UK expenditure by around £45billon- around 3% of GDP or around 5% of household spending.

However, the report also suggests that a gradual economic recovery is expected later in 2010 because of the combined effects of interest rate cuts, planned money supply increases and the proposed fiscal stimulus measures.

PwC head of macroeconomics John Hawksworth said, ""The knock-on effect of this level of wealth destruction will result in significantly more belt tightening and reduced spending by households over the next year and this situation could be exacerbated by expected further falls in house prices over this period.""

Barclays in Talks to Sell iShares

Barclays reported today that it has engaged in discussions with a number of potentially interested parties to sell iShares, its exchange-traded funds business.

The lender also said it has been in talks with the Treasury and the Financial Services Authority on the possibility of joining the government’s asset insurance scheme.

The sale of iShares is likely to be led by Roger Jenkins, who runs Barclays’ investment banking in the Middle East, and is expected to raise £4.2 billion.

IShares, had £226 billion of assets under management at the end of last year and sells exchange-traded funds, which allows investors to buy into indices.

Gainers & Losers

Land Securities led gainers in the FTSE 100 index shares with a rise of 29.2% followed by increases in Barclays of 22.7%, in Rexam Plc of 10.7%, in British Land Co. of 9.4%, and Wolseley of 9.1%.

Shares of Barclays surged after the bank said it is in talks with potential investors who were willing to buy its iShares business portfolio.

Old Mutual led decliners in the FTSE 109 index shares with a decline of 3.6% followed by RSA Insurance of 2.2%, in Admiral Group of 2%, in Legal & General Group of 1.9% and Amec Plc of 1.8%.