London Stocks Fall; Producer Prices Decline

Trupti Mehta
10 Jul, 2009
New York City

Stocks in London traded lower. The June month producer price index declined at a faster pace than in May. Insurance companies stocks fell after Aviva was the subject of market rumors of imminent dividend cut.

[R]6:00 PM London, 1:00 PM New York – Stocks in London traded lower. The June month producer price index declined at a faster pace than in May. Insurance companies stocks fell after Aviva was the subject of market rumors of imminent dividend cut.[/R]

UK stocks faced headwind as the four months rally increasingly looks tired. The weaker than expected consumer confidence in the U.S. lowered the trading sentiment in the afternoon.

In London FTSE 100 Index closed lower 31.49 or 0.76% to 4,127.17 and the pound closed $1.628 after the producer price report.

UK producer prices at factory gates declined 1.2% in June compared to 0.3% fall in May. The latest data from the Office of National Statistics showed that manufacturers are facing difficulties in passing along prices as demand softens.

Gainers & Losers

Anglo American increased 0.2% to 1,654.50 pence after it appointed new chairman John Parker and is expected to reject the proposed acquisition by Xstrata.

Aviva Plc declined 5% to 276 pence on the worries that dividend may be lowered. The worry also dragged other stocks in the sector including Legal & General by 2.7% and Old Mutual by 2.6%.

Bank of Ireland Plc declined 6.3% to 1.26 euros and Allied Irish Banks Plc fell 7.2% to 1.27 euros after investors feared that the bureaucratic delays in setting up an agency to acquire bad assets of the bank may hurt the banks.

BBA Aviation increased 2.4% to 117.25 pence.

BBA Aviation plc, the aviation services and systems support group said that ‘’it delivered a strong performance relative to our market for the first six months of the year and challenging environment and overall was in line with our expectations.’’ The company expects strong free cash flow in excess of £50 million for the first-half.

Begbies Traynor Group plc, an insolvency firm said full-year revenues rose 29% to £62.1 million from £48.1 million a year ago. Pre-tax profit for the year rose 26.3% to £7.2 million compared to net profit of £5.7 million a year ago.

Bodycote declined 11% to 111.75 pence.

Bodycote plc, a provider of metallurgical and materials testing services said “revenue for the continuing business for the six months to 30 June 2009 is 20% below the same period last year. On a constant currency basis, revenues fell 31%.’’

Bovis Homes Group decreased 1.5% to 389 pence after it eliminated interim dividend.

Bovis Homes Group PLC, the homebuilder said that “the group has continued to focus on strong cash generation, with a net cash inflow of £94 million in the half year, resulting in net debt of only £14 million at 30 June 2009.’’ The group had reduced net debt to £14 million. Average net debt for the first half of 2009 was £69 million.

Interserve PLC, a services, maintenance and building group said that “trading in the first half has continued in line with expectations, delivering progress overall versus the prior year''''s operating performance. The Group has good forward visibility, with 60% of anticipated 2010 revenues compared 60% of anticipated 2009 revenues in first-half of 2008. Public and private sectors'''' contribution increased to 75% of 2009 first-half revenues from 65% in first-half of 2008.”

London & Stamford Property decreased 3% to 115.25 pence after the company announced plans to raise £225 million through open offer.

Mitie Group increased 0.12% to 209 pence.

Mitie Group PLC, a provider of management services said that “At 30 June 2009 the group had secured 78% of forecast revenue for the year ended 31 March 2010 from 83% in July 2008.’’

Northgate decreased 1.8% to 67.50 pence.

Northgate Plc, a van hire company said full-year revenues rose 5% to £609.6 million from £578.5 million a year ago. Net loss for the year was £185.7 million or 257.4 pence per diluted share compared to net profit of £61.3 million or 85.8 pence per share a year ago.

Telit Communications plunged 14.7% to 29 pence.

Telit Communications Plc, the wireless technology provider said that first-half revenues expected to be approximated €28 million. The company said results for the full year are expected to be below market expectations.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 39 increased, 61 declined and 2 were unchanged.

Aviva plc decliners in the FTSE 100 index with a loss of 4.90% followed by losses in Rio Tinto plc of 3.33%, in Wolseley PLC of 3.28%, in Standard Life plc of 3.19%, in Lonmin plc of 3.10%.

Tesco PLC led gainers in the FTSE 100 index with a rise of 2.49% followed by increase in Schroders plc of 2.19%, in The Sage Group PLC of 2.04%, in United Utilities Group PLC of 2.00%, in Home Retail Group plc of 1.97%.

Europe Markets Review

In London FTSE 100 Index closed lower 31.49 or 0.76% to 4,127.17, in Paris CAC 40 Index decreased 42.84 or 1.42% to close at 2,983.10 and in Frankfurt DAX index lower 53.76 or 1.16% to close at 4,576.31. In Zurich trading SMI decreased 67.58 or 1.27% to close at 5,237.81.