Slower Rebound in UK Services; BA Cuts Capacity

Trupti Mehta
03 Jul, 2009
New York City

British Air for the second year in a row cut its summer capacity and cuts capital spending by 20%. Service sector showed increased activities in June but at a slower pace in May. UK home owners increaed equity by

[R]6:00 PM London, 1:00 New York – British Air for the second year in a row cut its summer capacity and cuts capital spending by 20%. Service sector showed increased activities in June but at a slower pace in May.[/R]

UK and European markets were nearly unchanged on a day when the U.S. markets were closed. In London trading, energy and mining stocks declined but media and bank sector stocks closed higher.

In London FTSE 100 Index traded higher 2.01 to 4,236.28 and the pound closed at $1.633.

The service sector index increased in June to 51.6 after 51.7 read in May. The two monthly back-to-back increases in the sector has raised hopes among many in the industry that the sector may show early signs of stabilization.

Gainers & Losers

British Airways Plc surged 5.5% despite the passenger air traffic in June fell 3.8% and the carrier in its new business plan lowered its capital expenditure by 20% to 580 million pounds and delayed the delivery of A380. The carrier lowered its summer capacity by 3.5% in addition to the 2.5% cut last summer.

Miners dropped after crude oil prices declined below $65 a barrel. The prices of copper, nickel, zinc and lead edged lower after the weak U.S. unemployment report.

Media stocks were active and edged higher after Credit Suisse recommended European media sector stocks. Reed Elsevier edged up 3.9% to 457.25 pence, BSkyB increased 2.1% to 464.50 pence, Daily Mail and General Trust added 1.4% but Pearson closed lower 0.8% to 581 pence.

Salamander decreased 0.2% to 190.75 pence after its chief executive said that the exploration block in Northeast Thailand has the potential to more discoveries in the region.

Ireland based building supplier Grafton Group dropped 1.4% to 2.56 euros after the company reported first half revenues declined 31% to 990 million euros and cautioned that the profits have been “impacted severely.”

European Islamic Bank surged 22% to 4.43 pence after the company confirmed that it has received the merger approaches.

The vehicle and fleet tracking company Cybit reported full year revenues increased 27% and offered optimistic outlook for the current fiscal year.

Morse surged 23.7% after it confirmed that revenues and operating earnings for the year will be at the upper end of the analysts’ estimates.

Bglobal surged 43.6% after it received £15 million of loans arranged by Barclays to roll out its smart meters sales.

Friends & Provident closed lower 6.7% to 63.5 pence after it spun off F&C asset management which closed at 66 pence on its first day of trading.

Europe Markets Review

In London FTSE 100 Index closed higher 2.01 or 0.05% to 4,236.28, in Paris CAC 40 Index increased 3.10 or 0.10% to close at 3,119.51 and in Frankfurt DAX index lower 10.18 or 0.22% to close at 4,708.21. In Zurich trading SMI decreased 16.72 or 0.13% to close at 5,338.51.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 47 increased, 51 declined and 4 were unchanged.

Friends Provident plc decliners in the FTSE 100 index with a loss of 6.73% followed by losses in Land Securities Group plc of 3.90%, in Old Mutual plc of 3.39%, in Fresnillo Plc of 2.63%, in Balfour Beatty plc of 2.51%.

British Airways Plc led gainers in the FTSE 100 index with a rise of 5.46% followed by increase in Reed Elsevier plc of 3.92%, in Barclays PLC of 2.77%, in Lloyds Banking Group plc of 2.43%, in The Royal Bank of Scotland Group plc 2.34%.