UK Stocks Fall on Weak Output Report

123jump.com Staff
07 Apr, 2009
New York City

U.K. manufacturing output drops 6.5% in the three months ending in February. Royal Bank of Scotland plans to cut 9,000 jobs to save nearly 2.5 billion pounds of cost.

[R]1:00PM New York, 6:00PM London - U.K. manufacturing output drops 6.5% in the three months ending in February. Royal Bank of Scotland plans to cut 9,000 jobs to save nearly 2.5 billion pounds of cost.[/R]

London stocks fell 1.6% on a raft of negative data indicating the country’s manufacturing output fell in the three months ended February. Royal Bank of Scotland also announced today that it will cut 9,000 jobs worldwide.

In London trading FTSE 100 index fell 1.6% or 63.02 to 3,930.52.

Of the FTSE 100 index stocks, 21 advanced, 80 declined, and one was unchanged. BAE Systems led gainers in the index shares with a rise of 5.8% followed by RSA Insurance Group soaring 5.1%.

Manufacturing Output Falls 6.5% in Feb Quarter

U.K.’s Office of National Statistics reported today that the country’s manufacturing output dropped 6.5% in the three months to February from the previous three months as output in the transport equipment industries declined 13.1%, basic metal and metal and metal products shed 11.2% and machinery and equipment products industries fell 11.7%.

The seasonally adjusted chained volume index for the output of the production industries in the period dropped 5.8% from the three months a month ago.

Output in manufacturing industries also fell 0.9% between January and February, with the most significant declines in transport equipment industries 3.7%, basic metal and metal products industries 1.6% and non-metallic mineral products industries 3.7%.

The ONS noted that mining and mining and quarrying output shed 4.3% in the three months to February from a quarter earlier and fell 8% from the same period a year ago.

Output in the sector also fell 0.9% in February from a month earlier.

In addition, output of the electricity, gas and water supply industries in the latest three months fell by 1% compared with the previous three months.

RBS to Cut 9,000 Jobs

Royal Bank of Scotland reported today that it slash 9,000 jobs or 5% of its workforce as a cost cutting measure.

The lender noted that it intends to minimize job losses by shifting employees into new positions. Of the announced job losses, 4,500 are expected to be cut in the UK and rest of the cuts are at worldwide locations. The today’s cuts are in addition to the previously announced cut of 2,700. The nationalized bank employs 170,000 people and may announce additional lay-off of 10,000 people.

Government further increased its stake in the bank to 70%.

RBS chief executive Stephen Hester said, ""We have set a new strategy for RBS to restore the bank to standalone strength as soon as practicable. Unfortunately, that means taking difficult decisions about jobs.""

Gainers & Losers

BAE Systems led gainers in the FSTE 100 index shares with a rise of 5.8% followed by increases in RSA Insurance of 5.8%, in Fresnillo of 4.4%, in Unilever Plc of 3.2%, in Randgold Resources of 2.8%.

Royal Bank of Scotland led decliners in the FTSE 100 index shares with a drop of 10.4% followed by losses in Barclays of 8.6%, in Lloyds Banking of 8.5%, in British Land Co. of 8%, and Man Group of 7.6%.

RBS dropped after announcing that it will eliminate as much as 9,000 jobs worldwide as a cost cutting measure.