Banks Lead Decliners in London; Tesco Sales

Mayank Mehta
08 Dec, 2009
New York City

Dubai worries dominated trading in London. The UK benchmark index declined after commodities and banks closed lower. Royal Bank of Scotland and Standard Chartered led the decliners in the sector. Tesco same store sales increased 2.8% in the third quarter.

[R]4:00PM London, 11:00 AM New York – Dubai worries dominated trading in London. The UK benchmark index declined after commodities and banks closed lower. Royal Bank of Scotland and Standard Chartered led the decliners in the sector. Tesco same store sales increased 2.8% in the third quarter.[/R]

UK stocks closed lower with banks leading the decliners. Royal Bank of Scotland dropped more than 7% and Standard Chartered Plc and HSBC Plc declined on the worries that the banks may have to absorb more Dubai linked losses.

The rating agency Moody’s Investors Services highlighted the growing budget deficits in the US and UK may force it to review its top ratings of sovereign debts of these nations.

Fed Chairman Bernanke yesterday stressed that the Fed has a plan to unwind the large stimulus and it will “not” be inflationary. Investors are increasingly worried about the inflationary pressures in the years to come.

The rising sovereign debt, growing fiscal deficits in the U.S., UK, Europe and several emerging markets has worried investors.

In London FTSE 100 Index closed lower 79.32 or 1.4% to 5,231.34 and the pound edged lower to close at $1.629 and at €1.103.

UK Output Decline

Overall production output in October fell by 8.4% from a year ago. Output in mining & quarrying declined by 11.8%, energy supply industry fell 8.6%. Annually manufacturing output fell 7.8% in October from same month of year ago.

Gainers & Losers

Anite plc added 1.5% to 32.75 pence the IT services provider said first-half revenues fell 25.7% to £35.2 million from £47.4 million a year ago. Net profit for the first-half fell 99.5% to £160,000 or 0.1 pence per diluted share compared to net profit of £31.6 million or 9.2 pence per share a year ago.

Carluccio's PLC increased 8.4% to 83.49 pence after the restaurant chain said full-year revenues rose 7.6% to £69.0 million from £64.1 million a year ago. Net profit for the full-year fell 58% to £1.5 million or 2.6 pence per diluted share compared to net profit of £3.6 million or 6.2 pence per share a year ago.

Caledon Resources plc plunged 25.4% to 43.25 pence after the board decided that it will not actively pursue the sale of the company

Domino Printing Sciences plc climbed 4.3% to 307.00 pence after the coding and printing solutions provider said full-year revenues rose 1% to £256.1 million from £253.4 million a year ago. Net profit for the full-year rose 15.7% to £19.2 million or 17.76 pence per diluted share compared to net profit of £16.6 million or 15.26 pence per share a year ago.

Intermediate Capital Group PLC an investment firm and fund manager of buyout debt rose 3.9% to 286.90 pence.

Lloyds Banking Group plc fell 1.1% to 53.17 pence after home prices increased 1.4% in November, fifth successive monthly increase with prices more than 4% higher over the first eleven months of the year.

Northgate plc dropped 0.7% to 239.50 pence an investment company said first-half revenues fell 4% to £375.9 million from £392.1 million a year ago. Net profit for the first-half fell 78% to £4.0 million or 5.0 pence per diluted share compared to net profit of £18.4 million or 55.8 pence per share a year ago.

The Royal Bank of Scotland Group plc fell 6.3% to 30.90 pence on the worries that mounting losses at Dubai World and its subsidiary Nakheel PJSC will generate more losses for the lender and other banks in UK.

Southern Cross Healthcare Group PLC surged 12.8% to 125.00 pence after the care homes group said full-year revenues rose 5.4% to £937.1 million from £889.4 million a year ago. Net loss for the full-year was £22.1 million or 11.75 pence per diluted share compared to net loss of £18.0 million or 9.57 pence per share a year ago.

Banks declined after investors worried that Dubai World subsidiary Nakheel PJSC may declare more losses in the second half of the year.

Standard Chartered Plc decreased 3.7% to 1,437 pence and Royal Bank of Scotland declined 7.7% to 30.45 pence

Tesco PLC fell 2.4% to 425.05 pence after the supermarkets operator said third quarter same store sales increased 2.8% and total sales increased 7.7%.

Tullow Oil plc decreased 1.3% to 1,248.00 pence.

Victrex plc slipped 2.9% to 808.50 pence after the maker of polymers said full-year revenues fell 26.4% to £103.8 million from £141.1 million a year ago. Net profit for the full-year fell 54.5% to £17.8 million or 21.6 pence per diluted share compared to net profit of £39.1 million or 47.4 pence per share a year ago.

Xstrata plc dropped 3.6% to 1,033.00 pence after the mining giant said it will permanently cease operation of its copper and zinc metallurgical plants at the Kidd Metallurgical site in Timmins on 1 May 2010, as part of a plan to restructure its Canadian metallurgical operations. The Kidd mine and concentrator will remain in operation.