UK Miners, Banks Fall; Retail Sales Rise

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

UK stocks edged sharply lower on the growing worries of rapid spread of swine flu. Commodities and miners declined. Banks fell after Bank of America and Citi are asked to raise more capital by Fed in the U.S. More UK retailers reported a rise in sales in April. Oil, copper and gold declined.

[R]8:30PM London – UK stocks edged sharply lower on the growing worries of rapid spread of swine flu. Commodities and miners declined. Banks fell after Bank of America and Citi are asked to raise more capital by Fed in the U.S.[/R]

FTSE 100 index declined 70.61 or 1.7% to 4,096.40. The benchmark indexes in UK and Europe declined after the World Health Organization raised its flu alert to the highest level in four years.

The health organization in its alert cited that more than 150 people in Mexico have died and the flu can no longer be contained. The alert, set up since 2005 was raised to phase 4 indicating sustained human to human transmission. The next phases 5 and 6 in alert represent widespread human infection.

The alert noted, “Given the widespread presence of the virus, the Director-General considered that containment of the outbreak is not feasible. The current focus should be on mitigation measures.”

The index of UK retail sales as measured by the Confederation of British Industry indicated a slight rebound in sales. Net 3% reported higher sales in April compared to net 44% said sales decline in March.

J Sainsbury declined 1.5% or 4.75 pence to 323.25 pence and was reported as the fastest growing retailer in the Easter holiday. Sales in the four weeks ending in April 18 increased 14.7% from a year ago and for the twelve weeks ending the same date increased 7.5%. Sales at Asda in the 12-week period increased 7.9% and at Tesco increased 4.6%.

Commodities and Miners Fall

Miners and commodities declined as investors take cautious views. Oil, gold and copper declined in London trading. Natural gas fell after LNG super tanker from Qatar is due to deliver its first shipment of cargo to meet the demand of utility companies.

Rio Tinto dropped 6% and Xstrata declined 6.1% to 563.50 pence. Anglo American declined 5.6% to 1,342 pence.

Banks Decline on Capital Adequacy Worries

Banks declined after media speculation suggested that Bank of America and Citigroup are requested by the Fed to raise more capital. The officials at the banks are working with the regulators and disputing the need to raise capital according to the Wall Street Journal.

123jump.com first reported on Friday that 19 banks are severely undercapitalized and may need at least $850 billion if economy weakens in 2009 and 2010 and unemployment jumps to 12%.

Royal Scotland Group Plc declined 4.7% to 32.70 pence and HSBC Plc declined 2% to 457 pence. Barclays Plc added 1.7% to 13.64 and Standard & Chartered declined 2% or 20 pence to 929.50 pence.

UK Gainers & Losers

Of the stocks in FTSE 100 index, 102 increased, 89 declined and 1 was unchanged.

Rio Tinto Plc led decliners in the FTSE 100 index with a loss of 6.2% followed by losses in Xstrata Plc of 6%, in Centrica Plc of 5.8%, in Standard Life of 5.6%, in Anglo American Plc of 5.6%.

Fresnilo Plc led gainers in FTSE 100 index with a rise of 3.4% followed by gains in Imperial Tobacco of 1.8%, in BAE System Plc of 1.5%, in Schroders Plc of 1.1% and in Unilever Plc of 1.1%.

Earnings Review

Liberty International Plc declined 7.75 pence to 425.50 pence after it reported completion of the offering of 200 million shares priced at 310 pence.

St James’s Place Plc dropped 4% or 7 pence to 157 pence after the first quarter revenues declined 5%.

WPP Plc declined 3.9% or 17.25 pence to 424.25 pence after it reported its first quarter revenue increase of 35.9% to 2.117 billion pounds and in constant currency the revenues were up 11.1%. Excluding the recent acquisition of Taylor Nelson Sofres Plc revenues declined 5.8% in the quarter from a year ago. Average net debt in the first quarter of 2009 was £3.421 billion, compared to £2.081 billion in 2008, at 2009 exchange rates.

Friends Provident Plc dropped 5% to 59.30 pence after first quarter sales fell 40% to 147.90 million pounds.

Europe Markets Review

In London FTSE 100 Index closed lower 70.61 or 1.69% to 4,096.40, in Paris CAC 40 Index decreased 51.41 or 1.66% to close at 3,051.02 and in Frankfurt DAX index lower 86.65 or 1.85% to close at 4,607.42. In Zurich trading SMI decreased 66.88 or 1.29% to close at 5,109.09.