UK Indexes Weak; GlaxoSmithKline Down

Mayank Mehta
22 Feb, 2010
New York City

UK stocks closed lower after a weakness in drugmakers. Miners and banks led the gainers. GlaxoSmithKline Plc dropped 2.6% after two U.S. lawmakers reopened the investigations linked to its Type 2 diabetes treatment drug.

[R]6:30 PM London, 1:30 PM New York – UK stocks closed lower after a weakness in drugmakers dragged the indexes. Miners and banks led the gainers. GlaxoSmithKline Plc dropped 2.6% after two U.S. lawmakers reopened the investigations linked to its Type 2 diabetes treatment drug.[/R]

UK stocks reacted in early trading to better than expected economic data in the U.S. and rising commodities prices. Market sentiment turned negative after drugmakers declined after the U.S. President proposed higher fees.

In London FTSE 100 Index closed lower 6.10 or 0.11% to 5,352.07 and the pound traded at $1.561.

GlaxoSmithKline Plc declined 2.6% to 1,203.50 after two U.S. lawmakers revived a three year old study linking its diabetes treatment drug Avandia to heart attacks. Sales of the drug plunged to $0.65 billion after reaching a peak of $3 billion in 2006 after the New England Journal of Medicine said that the drug raises the risk of heart attack.

The company denies that the drug increases the risk of heart failure. Several lawsuits are filed in the Federal and state courts.

U.S. Senator Max Baucus and Charles Grassley sent a letter to the U.S. Food and Drug Administration Commissioner on Feb 18 asked to explain what steps the agency is taking to protect patients.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 40 increased, 57 declined and 5 were unchanged.

Next Plc decliners in the FTSE 100 index with a loss of 2.94% followed by losses in GlaxoSmithKline Plc of 2.55%, in Marks and Spencer Group Plc of 2.45%, in Thomas Cook Group Plc of 1.78%, and in Burberry Group Plc of 1.71%.

Bunzl Plc led gainers in the FTSE 100 index with a rise of 3.83% followed by increase in The Royal Bank of Scotland Group Plc of 3.62%, in Eurasian Natural Resources Corporation Plc of 3.00%, in Vedanta Resources Plc of 2.98%, and in Old Mutual Plc of 2.40%.

Stock Movers

Banks closed higher. Lloyds Banking increased 2.3% to 51.67 pence and Standard Chartered Bank added 1.8% to 1,541 pence. Barclays added 1.3% to 316 pence.

Bank of Ireland Plc declined 6.2% to 1.18 euros after the troubled lender said it will allocate 15.7% stake in the company to the Irish government and not cash dividend.

Bunzl Plc increased 3.8% to 678 pence after the vending machine maker reported annual revenues increase of 11% to 4.7 billion and operating profit increase of 5% to 297.5 million and adjusted earnings of 55.9 pence a share. The company also increased dividend per share by 6% to 21.55 pence.

Ladbrokes Plc increased 1.3% to 153 pence after UBS lifted its views on the betting company.
Retailers were on the decline. Next Plc decreased 2.9% to 1,884 pence, Marks & Spencer declined 2.6% to 1,203 pence and Burberry Group fell 1.7% to 634 pence.

Miners led the gainers in London trading. Eurasian Natural increased 3% to 1,065 pence, Vedanta Resources increased 3% to 2,630 pence and Kazakhmys Plc added 2.1% to 1,363 pence. Rio Tinto and Antofagasta added 1.5%.

Old Mutual Plc increased 2.4% to 111.1 pence after a report in Financial Times suggested that the company is looking to sell its U.S. life insurance company.