UK Q3 GDP Shrinks; Stocks Rise

Mayank Mehta
23 Oct, 2009
New York City

UK third quarter GDP fell at 0.4%. The six quarterly declines in a row is the longest streak since the record keeping began in 1955. The latest economic data surprised most economists and the prospect of the economic recovery remain slim.

[R]4:00PM London, 11:00 AM New York – UK third quarter GDP fell at 0.4%. The six quarterly declines in a row is the longest streak since the record keeping began in 1955. The latest economic data surprised most economists and the prospect of the economic recovery remain slim.[/R]

The UK gross domestic product in the third quarter declined 0.4% surprising most economists. The six quarterly declines in a row is the longest streak since the record keeping began in 1955. The GDP shrank 5.2% from a year ago and Britain is facing its worst economic crisis in the last sixty years.

The economy shrank 0.59% in the second quarter and 2.49 in the first quarter of this year after falling at a rate of 1.78% in the fourth quarter of 2008 and 0.73% in the third quarter of 2008.

The pound dropped 1.7% against the dollar and 2-year gilts declined to yield 0.88%.

In London FTSE 100 Index closed higher 63.26 or 1.2% to 5,270.62 and the pound edged lower to close at $1.634 and at 1.088 euros.

The Office of National Statistics noted service sector shrank 0.2%, construction declined 1.1% and industrial production dropped 0.7% in the quarter.

Gainers & Losers

Brit Insurance Holdings PLC added 2.3% to 213.40 pence.

British Sky Broadcasting Group plc added 0.4% to 562.00 pence after the satellite television group said first quarter revenues rose 10.5% to £1.38 billion from £1.25 billion a year ago. Net profit for the quarter rose 75% to £128 million or 7.3 pence per diluted share compared to net profit of £73 million or 4.2 pence per share a year ago.

Cape plc rose 1.3% to 269.50 pence after the industrial support services group received three contract renewals in the UK totaling more than £25 million.

The Davis Service Group Plc the laundry and workwear firm added 3.5% to 420.10 pence.

Fidessa Group plc climbed 2.5% to 1,293.00 pence and financial software company guided higher annual earnings growth.

Filtrona plc increased 7.0% to 171.00 pence an international specialty plastic and fiber products supplier said third quarter revenues rose 3.8% compared to a year ago and down 3.5% at constant exchange rates. Operating profit increased 16.1% from a year ago and up 5.9% at constant exchange rates. Net debt was £119 million at the end of the third quarter.

Hardy Oil and Gas plc plunged 35.7% to 351.00 pence after the energy explorer with interests predominantly in India abandoned the first of the four wells it plans to drill offshore blocks in India.

Medgenics, Inc the biotech researched surged 40.5% to 11.24 pence after the company secured the financial partnership with a large pharmaceutical company to commercialize its tissue protein therapy technology.

Provident Financial plc fell 0.9% to 951.00 pence after the sub-prime lender issued a cautious outlook till the end of the first quarter next year as the job market remains weak.

Invensys plc advanced 3.7% to 309.50 pence an engineering company said Brazilian engineering company Montagens e Projetos Especiais and Spanish telecoms specialists Infoglobal signed a £255 (€280) million contract to upgrade the signaling and automatic train control on lines 8, 10 and 11 of São Paulo''s Metro system.

Zotefoams plc rose 6.2% to 93.00 pence after the foam maker said seasonally adjusted sales increased in the quarter compared with the low levels experienced in the first six months of 2009.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 67 increased, 32 declined and 3 were unchanged.

BT Group Plc decliners in the FTSE 100 index with a loss of 3.15% followed by losses in Bunzl Plc of 1.96%, in 3i Group Plc of 1.85%, in Cable & Wireless Plc of 1.81%, in Segro Plc of 1.73%.

Prudential Public Limited Company led gainers in the FTSE 100 index with a rise of 5.15% followed by increase in Autonomy Corporation Plc of 4.56%, in Anglo American Plc of 4.16%, in Xstrata Plc of 3.69%, in The Royal Bank of Scotland Group Plc of 3.45%.