UK GDP Shrinks 0.8%; Vodafone Sales Rise

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

Stocks in London closed higher for the tenth day in a row despite the economy contracting in the second quarter. The benchmark FTSE 100 index increased for the tenth day in a row, the longest rally in five years. Vodafone sales increased 9.3% on currency and acquisitions.

[R]7:00 PM London, 2:00 New York – Stocks in London closed higher for the tenth day in a row despite the economy contracting in the second quarter. The benchmark FTSE 100 index increased for the tenth day in a row, the longest rally in five years. Vodafone sales increased 9.3% on currency and acquisitions.[/R]

UK economy contracted at a faster pace than expected in the second quarter. Gross Domestic Product shrank 0.8% from the first quarter according to the Office of National Statistics. The economy contracted at 2.4% in the first quarter.

The weakness in construction and business services contributed the GDP shrinkage. Construction segment dropped 2.2% from the previous quarter and 14.7% from a year ago. Business services and financial services decreased 0.7% from a quarter ago and 4.4% from a year ago.

Gainers & Losers

Vodafone increased 2.9% to 120.25 pence after it reported quarterly revenues increased 9.3% on exchange rate and mergers. Revenues increased to £10.74 billion.

London Stock Exchange increased 4.3% to 689.50 pence after the recent market gains in last two weeks and increased trading activities may improve exchange earnings.

Anglo American decreased 1.1% to 1,916 pence after the De Beers reported sharply lower revenues in which the mining company controls 45% stake. The diamond mining company reported first half profit before taxes dropped to $140 million compared to $662 million a year ago and sales cut in half to $1.7 billion from $3.7 billion in first half in 2008.

Man Group increased 3.1% to 288 pence and Schroders NV added 2.6% to 783 pence on the hopes that recent market gains will help the investment managers.

National Express surged 6.7% to 345.75 pence after Spain based Cosme family that controls 18% of the rail and bus operator is likely to bid along with private equity company CVC for the company.

Compass Group declined 4% to 313.25 pence after it reported disappointing third quarter results.

Yell Group surged 9.7% to 31 pence after it estimated better than expected earnings outlook.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 52 increased, 49 declined and 1 were unchanged.

Pennon Group Plc decliners in the FTSE 100 index with a loss of 4.94% followed by losses in Compass Group Plc of 3.98%, in Pearson Plc of 2.73%, in BAE Systems Plc of 2.42%, in TUI Travel Plc of 2.28%.

London Stock Exchange Group Plc led gainers in the FTSE 100 index with a rise of 4.31% followed by increase in 3i Group of 3.85%, in Lonmin Plc of 3.76%, in Standard Chartered Plc of 3.34%, in Man Group Plc of 3.04%.

Europe Markets Review

In London FTSE 100 Index closed higher 16.81 or 0.37% to 4,576.61, in Paris CAC 40 Index decreased 7.27 or 0.22% to close at 3,366.45 and in Frankfurt DAX index lower 17.92 or 0.34% to close at 5,229.36. In Zurich trading SMI decreased 4.61 or 0.08% to close at 5,760.90.