UK Stocks Fall; FSA Triples Fines

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

In London trading mining and energy companies dropped after weak crude oil and metal prices. UK regulatory agency proposed tighter supervision and individual fines as high as 40% of compensation. Rio Tinto sells Alcan asset for $1.2 billion to Bemis Company.

[R]6:00 PM London, 1:00 PM New York – In London trading mining and energy companies dropped after weak crude oil and metal prices. UK regulatory agency proposed tighter supervision and individual fines as high as 40% of compensation. Rio Tinto sells Alcan asset fot $1.2 billion to Bemis Company.[/R]

UK stocks edged lower after weak mining stocks and commodities and energy prices. The Financial Services Authority today proposed to impose larger fines to offenders and corporations that fail to comply with the regulations.

The regulatory agency is looking to mollify critics who claim that current fine levels have done little to deter the traders and banks and insurance companies. The FSA said that revised fines on a sliding scale could be as much as 20% of the business unit of a company and 40% of total compensation of the people involved.

In London FTSE 100 Index closed lower 41.37 or 0.98% to 4,194.91 and the pound closed down 1.2% to $1.63.

Rio Tinto Sells Assets for $1.2 Billion

Rio Tinto sold its American packaging division to Bemis for $1.2 billion to lower its debt. Rio acquired the food packaging division as a part of its 2007 purchase of Canadian aluminum maker Alcan for $38 billion.

Bemis Company, Inc ((BMS)) will pay $1 billion in cash and $200 million equity.

Rio Tinto ((RTP)) recently completed $15.2 billion in rights offering and has sold several businesses to lower its total debt of $39 billion. The company is scheduled to repay $8.9 billion in August.

Bemis will acquire 23 flexible packaging plants in the U.S., Canada, Mexico, Brazil, Argentina and New Zealand.

Gainers & Losers

Miners and energy companies fell after weakness in copper, zinc and precious metal prices. Crude oil also dragged energy related leading companies in the sector.

Lonmin decreased 8.5% to 1,060 pence, Antofagasta declined 5.4% to 566 pence and Rio Tinto dropped 7% to 1,885 pence. Kazakhmys dropped 6.1% to 591 pence, Tullow Oil dropped 2.8% to 887 pence and Jon Wood Group decreased 6.6% to 247 pence.

British Airways decreased 1.3% to 123.90 pence after employees rejected a plan to eliminate 4,000 staff and freeze pay.

EasyJet increased 2.7% to 273 pence after it said it carried 0.8% more passengers in June on top of 1.8% passenger increase in May. The load factor edged lower 0.6% to 86.3% and transported 4.15 million passengers.

Moneysupermarket.com declined 1.1% to 47.50 pence after the company reiterated its April guidance when it had indicated stable revenues after a sharp fall in the first quarter.

San Leon Energy surged 18% to 23 pence after it reported commercial quantity of natural gas in the Palo Pinto County, Texas.

Bglobal surged 28% to 16.25 pence after the meter maker marketed its services to help businesses to comply with the UK directive for carbon emission.

Europe Markets Review

In London FTSE 100 Index closed lower 41.37 or 0.98% to 4,194.91, in Paris CAC 40 Index decreased 37.35 or 1.20% to close at 3,082.16 and in Frankfurt DAX index lower 56.39 or 1.20% to close at 4,651.82. In Zurich trading SMI increased 15.64 or 0.29% to close at 5,354.15.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 39 increased, 60 declined and 3 were unchanged.

Lonmin Plc decliners in the FTSE 100 index with a loss of 8.54% followed by losses in Xstrata plc of 7.45%, in Rio Tinto plc of 6.96%, in Kazakhmys PLC of 6.11%, in Old Mutual plc of 5.48%.

Reckitt Benckiser Group Plc led gainers in the FTSE 100 index with a rise of 2.52% followed by increase in Rexam PLC of 1.83%, in Cadbury plc of 1.81%, in British American Tobacco plc of 1.75%, in Unilever PLC 1.75%.