UK Service Industry, Confidence Recover

123jump.com Staff
06 May, 2009
New York City

UK stocks advanced on a rise in metals and mining companies. Ahead of Bank of England rate decision tomorrow, investors focused on the economic condition beyond recession. Service industry decline appears to stabilize and consumer confidence is on the rebound. British Air traffic increased in April.

[R]6:00 PM London – UK stocks rose for the second day on a rise in metals and mining companies. Ahead of Bank of England rate decision tomorrow, investors focused on the economic condition beyond recession. Service industry decline appears to stabilize and consumer confidence is on the rebound.[/R]

A private measure of service industry showed that the industry is still shrinking but at a slower pace in April. Consumer confidence measure also surged in the month and UK home prices declined for the third month in a row.

The index prepared by Chartered Institute of Purchasing and Supply increased to 48.7 in April from 45.5 in March.

Nationwide Building Society said that the index of consumer confidence increased to 50 from 42 in March.

Halifax, the division of Lloyd Banking Group estimated that the UK home prices in April declined 1.7% from March and dropped 17.7% from a year ago.

The Bank of England is expected to leave its key lending rate 0.5% unchanged at a meeting tomorrow and will take a decision to spend the balance of the £75 billion to purchase government debt.

In London FTSE 100 Index closed higher 59.55 or 1.37% to 4,396.49. Stocks traded higher after central bank in China indicated that the economy is healthy and there is ample liquidity in the financial system.

Gainers & Losers

Next Plc declined 2.7% to 1,640 pence after it offered weak outlook for the second quarter.

Home Retail Group increased 2.3% to 257.25 pence after UBS lifted the rating on the retailer to ‘buy’ from ‘neutral.’ DSG International Plc fell 3.3% to 39 pence after Morgan Stanley lowered its rating on the electronic retailer.

EasyJet Plc declined 4% to 319.25 pence after its first half loss increased despite higher load factor and lower fuel costs. The previously agreed contracts to by the fuel at a higher prices contributed to the larger loss.

British Traffic in Economy Travel Rises

British Airways increased 5% or 8 pence to 173.9 after it reported better than expected April traffic. The total miles flown by customers as a measure of traffic increased 0.9% from a year ago. With the Easter holiday in the month, economy passenger travel increased 5.2% and business and first class travel declined 18%.

Earnings News

BAA Limited, owner of London’s Heathrow, Gatwick and Stansted airports said first quarter sales rose 16% to £522 million from £450.7 million a year ago. Net loss for the quarter was £228.8 million compared to £39.2 million a year ago.

CSR plc, British blue tooth wireless chip company said first quarter revenues fell 50% to $80.6 million from $160.9 million a year ago. Net loss for the quarter was $11.3 million or 9 cents per diluted share compared to $41.9 million or 32 cents per share a year ago.

CSR plc, in the last one year traded as high as 356.00 pence in September 2008 and as low as 140.00 pence in December 2008. Based on the yesterday’s closing price of 285.00 pence the company has market cap of £380.17 million.

easyJet plc, the low-cost airline operator said first-half sales rose 15.7% to £1.03 billion from £892.2 million a year ago. Net loss for the quarter was £85.9 million or £20.4 per diluted share compared to £43.3 million or £10.3 per share a year ago.

easyJet plc, in the last one year traded as high as 423.25 pence in September 2008 and as low as 206.25 pence in November 2008. Based on the yesterday’s closing price of 330.50 pence the company has market cap of £1.39 billion.

The Sage Group PLC, the U.K.’s largest software maker said first-half sales rose 17% to £748.4 million from £640.4 million a year ago. Net income for the quarter was £97.5 million or £7.43 per diluted share compared to £84.6 million or £6.46 per share a year ago.

The Sage Group PLC, in the last one year traded as high as 229.50 pence in May 2008 and as low as 143.50 pence in November 2008. Based on the yesterday’s closing price of 198.00 pence the company has market cap of £2.61 billion.

FTSE 100 Index Gainers & Losers

Of the stocks in FTSE 100 index, 73 increased, 28 declined and 1 was unchanged.

Drax Group Plc led decliners in the FTSE 100 index with a loss of 7% followed by losses in Lloyds Banking Group of 6.5%, in Antofagasta Plc of 6.4%, in Man Group Plc of 5.6%, in Cobham Plc of 5%, in Royal Bank of Scotland of 4.8%, and in Bunzl Plc of 4.2%.

Inmarsat Plc led gainers in the FTSE 100 index with a rise of 11% followed by gains in Standard Chartered of 9.2%, in Legal & General Group of 9%, in Hammerson Plc of 7.4% and in Intertek Group of 7.2%.