UK Stocks Fall; Aviva Spins Capital Outlook

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

UK stocks fell along with a decline in European markets. British Air led decliners in the FTSE 100 index along with a sell-off in transportation related stocks. Aviva Plc jumped 5% after it completed 200 million pounds offering but will not reveal the terms of the offering.

[R]8:00PM London, 2:00PM New York – UK stocks fell along with a decline in European markets. British Air led decliners in the FTSE 100 index along with a sell-off in transportation related stocks.[/R]

In London trading stocks traded mixed after Spain reported its first case of swine flu virus. Traders worried that if the spread of the influenza is not checked soon, the global trade and economies around world may shrink.

The FTSE 100 index closed up 11.02 or 0.27% to 4,167.01 with pharmaceutical stocks rising and transportation stocks falling. Aviva Plc increased 5% after it reported 25% increase in its capital surplus on a bond offering and reinsuring life insurance policies.

However, the insurance companies are willing to reveal results of stress conducted by the Financial Services Authority.

The Aviva Chief Andrew Moss suggested that company capital likely to rise more if markets jump 40% than drop if markets fall 40% from the end of March. However, his credibility is questioned when he will not reveal the results of the stress-tests. The recently completed hybrid debt offering raise 200 million pound and will not disclose the terms of the offering.

Of the stocks in FTSE 100 index, 43 increased, 58 declined and 1 was unchanged.

British Airways Plc led decliners with a loss of 7.8% followed by losses in Carnival Plc of 6.8%, in Thomas Cook Group of 4.4%, in Intercontinental Hotels Group Plc of 4.4%, in Liberty International Plc of 3.9% and in Friends Provident Plc of 3.9%.

Aviva closed up 5% to 287 pence at close.

GlaxoSmithKline led gainers in the FTSE 100 index with a rise of 5.7% followed by increase in Aviva Plc of 5%, in National Grid Plc of 4.3%, in AstraZeneca Plc of 3.7% and in BT Group plc of 3.6%.

European Pharma Rise

European markets were on the decline with a fall in commodities and crude oil prices and first reported case of swine flu in Spain. Airlines led the decliners in trading with Air France KLM and British Air declined as much as 10% and 17% and the Spain based Iberia Lineas Aereas de Espana SA dropped 9%.

Pharmaceutical companies edged higher on the hopes of higher sales of anti-viral drugs to governments. Roche Holding AG gained 3.3% in Zurich trading and GlaxoSmithKline PLC gained 5.4% in London trading.

Glaxo makes Relenza and Roche sells Tamiflu and government agencies and World Health Organization is looking to diversify their inventory of flu treatment drugs.

The British pound declined 0.5% against the U.S. dollar and 1% against yen after former UK Treasury adviser Roger Bootle worried that the Britain may face severe contraction in the economy on persistent weakness in home prices.

Europe Markets Review

In London FTSE 100 Index closed higher 11.02 or 0.27% to 4,167.01, in Paris CAC 40 Index decreased 0.42 or 0.01% to close at 3,102.43 and in Frankfurt DAX index higher 19.75 or 0.42% to close at 4,694.07. In Zurich trading SMI increased 62.92 or 1.23% to close at 5,175.95.