UK 11-Day Stock Rally; Pearson Up 12%

Mayank Mehta
27 Jul, 2009
New York City

UK stocks continued to rally for the eleventh day in a row. Commodities and earnings linked stocks closed higher. Rexam is expected to raise ₤350 million in rights issue. Beazley Group declined on 55% drop in earnings. Pearson increased 12% after it increased its dividend.

[R]6:00 PM London, 1:00 AM New York – UK stocks continued to rally for the eleventh day in a row. Commodities and earnings linked stocks closed higher. Rexam is expected to raise ₤350 million in rights issue. Beazley Group declined on 55% drop in earnings. Pearson increased 12% after it increased its dividend.[/R]

The benchmark stock index in London gained for the eleventh day in a row on the expectations of better earnings, rising commodities prices and optimism about the U.S. economy.

In London FTSE 100 Index closed higher 15.38 or 0.35% to 4,361.84 and the pound closed at $1.64 and 1.16 euros.

British Land Company and Land Securities Group declined after rating agency S&P indicated that it may lower its view on real estate companies.

Gainers & Losers

BT Group decreased 2.4% to 112.4 pence.

Beazley Group Plc lost 1.6% or 1.75 pence to 103.25 pence after the insurer’s profit plunged 55% during the first half on currency variations.

DQ Entertainment increased 5 pence to 85 pence after it reported annual revenues increased 34% to $32.2 million and profit before tax decreased to $5.1 million from $7.4 million. The company has order book of $92 million.

Dialight plc slid 0.6% 154 pence after the electronic component maker said first-half revenues rose 0.3% to £34.6 million from £34.5 million a year ago. Net profit for the first-half rose 72.5% to £2.26 million or 7.1 pence per diluted share compared net profit of £1.31 million or 4.1 pence per share a year ago.

e-Therapeutics plc decreased 4.7% or 1.50 pence to 30.00 pence after the drug discovery and development company said for the year ended in January revenues rose 4.7% to £67,000 from £64,000 a year ago. Pre-tax profit for the year was £1.96 million compared net loss of £2.2 million a year ago.

Lonrho plc rose 2.0% or 1.6 pence to 7.90 pence after the African conglomerate said third quarter turnover was £18.5 an increase of 226% on a reported basis and 16% increase on a like for like basis.

For the first nine months turnover was £60.0 million an increase of 257% on a reported basis against the previous year and 44% increase on a like for like basis. Pre-tax losses for the first nine months were £3.9 million compared to a loss of £15.9 million in the previous year.

National Grid plc rose 1.0% or 6.00 pence to 569.00 pence after gas and electricity pipeline grid operator said it is on track to deliver a strong performance in 2009/10.

Pace plc lost 2.1% or 4.25 pence to 196.00 pence after the set top boxes maker said first-half revenues rose 128% to £526.54 million from £231.05 million a year ago. Net profit for the year rose 175% to £21.68 million or 7.3 pence per diluted share compared net profit of £7.89 million or 3.1 pence per share a year ago.

Pearson Plc increased 12% to 679 pence after it increased its interim dividend to 12.2 pence. The first half sales increased 22% to £2.40 billion and on constant currency increased 1%. Earnings per share increased 41% to 7.9 pence. The company reiterated its annual earnings per share outlook of 57.7 pence despite 3 pence a share impact on currency adjustment of pound against the dollar.

Rexam PLC plunged 10.5% or 34.00 pence or 289.75 pence after the packaging group is in process of raising £350 million in rights issue. The packaging company debt was downgraded recently deeper into junk level.

Stagecoach Group decreased 2.2% to 134.75 pence after it confirmed that it is in negotiations with National Express to acquire some of its business.

WSP Group plc decreased 1.4% or 3.50 pence to 241.25 pence after the engineering consultant said first-half revenues rose 3.7% to £376.9 million from £363.5 million a year ago. Net profit for the year fell 24% to £12.4 million or 18.6 pence per diluted share compared net profit of £16.3 million or 25.4 pence per share a year ago.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 54 increased, 47 declined and 1 were unchanged.

Rexam Plc decliners in the FTSE 100 index with a loss of 12.12% followed by losses in Land Securities Group Plc of 3.83%, in 3i Group Plc of 3.81%, in Barclays Plc of 3.49%, in Kingfisher Plc of 3.46%.

Pearson Plc led gainers in the FTSE 100 index with a rise of 12.05% followed by increase in Lloyds Banking Group of 6.85%, in Old Mutual Plc of 4.98%, in Lonmin Plc of 4.67%, in Kazakhmys Plc of 4.44%.

Europe Markets Review

In London FTSE 100 Index closed higher 9.52 or 0.21% to 4,586.13, in Paris CAC 40 Index increased 5.91 or 0.18% to close at 3,372.36 and in Frankfurt DAX index higher 22.19 or 0.42% to close at 5,251.22. In Zurich trading SMI increased 13.99 or 0.24% to close at 5,774.89.