UK Banks Decline; Budeget Deficit Soars

Mayank Mehta
18 Dec, 2009
New York City

UK stocks closed lower after banks declined on the worries that conditions in commercial property market may deteriorate more. UK budget deficit in November soars 33% to

[R]4:00 PM London, 11:00 AM New York – UK stocks closed lower after banks declined on the worries that conditions in commercial property market may deteriorate more. UK budget deficit in November soars 33% to £20.3 billion from £15.5 billion a year ago. the Council of Mortgage Lenders said that lending declined 10% in November.[/R]

UK stocks edged lower on weak banking sector after the European Central Bank revised the estimates of loan losses in the euro area higher by 13%. The central bank cited weak climate for commercial real estate and estimated a decline in values for mortgage backed bonds and securities.

The Office for National Statistics said that the UK government budget gap in November surged 33% to £20.3 billion from £15.5 billion a year ago. The national debt is now over 60% of UK output, record since 1993.

In London FTSE 100 Index closed lower 20.8 or 0.4% to 5,196.81 and the pound edged higher to close at $1.618 and at €1.128.

The Council of Mortgage Lenders said that mortgage lending declined 10% from October.

Gainers & Losers

Aggreko PLC increased 3.6% to 865.00 pence after the provider of temporary power and temperature control solutions provider said that the business has been “better than anticipated,” driven by a strong performance in international markets.

Revenue for the year will be slightly over £1 billion, up 7% than the last year, and operating profit will be around £260 million, up 27% than the last year. The earnings per share will increase by at least 33%.

Aviva plc fell 0.8% to 370.00 pence and the insurer appointed Gary Price as marketing director of its UK business.

Axis-Shield plc decreased 1.5% to 384.00 pence an international in vitro diagnostics company announced that for fiscal year 2009 revenues are expected to be approximately 14% higher than in 2008. After adjustment for discontinued business growth is anticipated to be around 18%, which equates to approximately 6% on a constant currency basis.

Balfour Beatty plc the focused on engineering contractor increased 0.2% to 248.50 pence.

British Airways Plc advanced 0.3% to 192.80 pence after the court invalidated the strike ballot by cabin crew during the holiday period.

BTG plc decreased 0.4% to 170.40 pence after the specialty pharmaceuticals group said that it has licensed exclusive worldwide rights to Allergan to develop products for diseases and conditions of the eye using BTG’s ReGel drug delivery system. Under the terms of the agreement, company will receive an undisclosed upfront payment, and potential additional future milestones and royalties on product sales.

Forth Ports plc fell 3.3% to 1,066.00 after the port operator made cautious comments about the business in 2009.

Hochschild Mining plc increased 1.0% to 320.60 pence after enters into $16 million private placement with Gold Resource Corporation and purchase of 1.95 million GRC shares at $8.20 per share.

Keller Group plc declined 1.5% to 625.00 pence an international ground engineering specialist expects that revenues and margins since the first half had been below the comparable period in 2008.

Mears Group PLC the social housing maintenance specialist climbed 1.7% to 274.25 pence.

PartyGaming plc dropped 0.1% to 258.30 pence after the online gaming group said solid current trading and return to sequential revenue growth for all product verticals. The company guided that the current year revenue is in line with the management expectations and organic operating earnings are slightly ahead of board’s expectations.

Rio Tinto plc rose 0.9% to 3,163.50 pence and the mining giant awarded a major new mining contract in its Australia based Pilbara iron ore operations to a joint venture between native title holders the Eastern Guruma and mining services company NRW.

Sportingbet Plc added 1.9% to 66.25 pence after the online betting firm said the main trends seen in the first quarter have continued and trading across the business is in line with management expectations.

Topps Tiles Plc the retail and wholesale distributor of ceramic tiles gained 2.7% to 83.00 pence.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 37 increased, 61 declined and 4 were unchanged.

Lloyds Banking Group Plc decliners in the FTSE 100 index with a loss of 5.37% followed by losses in Wolseley Plc of 3.96%, in Fresnillo Plc of 3.17%, in Barclays Plc of 3.14%, and in Carnival Plc of 2.91%.

Inmarsat Plc led gainers in the FTSE 100 index with a rise of 1.77% followed by increase in Resolution Limited of 1.75%, in Liberty International Plc of 1.54%, in Petrofac Limited of 1.35%, and in Smith & Nephew Plc of 1.30%.