UK Recovers 10 Loss in the Week

Market Update Analysis:

UK Recovers 10% Loss in the Week

Author: 123jump.com Staff
123jump.com
Last Update: 3:56 PM EST January 25 2008

UK stocks fell after a wild week. Rate decline in the U.S. by 0.75% and fiscal stimulus package from the U.S. lawmakers revived the flagging confidence in the U.S. economy. Stocks in the UK rebounded on Tuesday and Thursday but edged lower on Friday. For the week, FTSE 100 lost nearly 10% and managed to regain nearly all the losses. Imperial Tobacco rose after it plans to gain full control of Spanish tobacco company. Gold rose on South African production problems. Pound rebounded.

3:00PM New York, 8:00PM London - Homebuilders, financial stocks drag U.K 0.12% down. Kingfisher appoints Ian Cheshire Group Chief Executive

Stocks in London plunged in the afternoon session led by homebuilders and financial stocks.

In London trading FTSE 100 fell 0.12% or 6.8 to 5,869.00.

Of the 102 FTSE100 stocks, 39 gained, 60 declined and 3 were unchanged. Imperial Tobacco led advancing stocks with a rise of 9.02%, followed by Vedanta Resources gaining 7.21% as oil prices increased and metals rose to record highs.

Merger News

Carlsberg and Heineken announced today that the company Scottish & Newcastle boards have agreed for 7.8 billion pounds merger deal. Under the terms of the deal Carlsberg will assume 54.5% equity, while Heineken will take 45.5%. Scottish & Newcastle close up 2.22%.

The Scotland based brewer will be split along the geographic lines with operations in China, Vietnam, France, and Russia controlled by Carlsberg and in India, UK, US, Portugal, Ireland, and Belgium will be controlled by Heineken.

The deal still needs approval of shareholders.

Old Mutual announced today on its website that discussions are continuing with Royal Bafokeng Holdings Limited concerning the potential sale by Old Mutual to RBH of a controlling stake in Mutual & Federal Insurance Company Limited.

Gold Stocks

Gold prices rose 1.1% to reach a record $922.59 per ounce, while platinum gained 2.8% to $1,655 an ounce after South African power utility Eskom Holding Limited asked mining companies to reduce energy consumption. The companies had agreed on power cuts that could lower the production between 10% and 15%.

AngloGold Ashanti Limited and Gold Fields have stopped production in the country. Xstrata Plc jumped 3.15% and BHP Billiton spiked 2.24% on the news.

Crude oil prices also advanced as investors surmised that U.S. stimulus plan will keep the demand for crude oil and gasoline rising.

Kingfisher

UK retailer, Kingfisher announced today on its Web site that the retailer has appointed Ian Cheshire as Group Chief Executive effective next Monday. Kingfisher’s Chairman Peter Jackson said Cheshire is better placed to spearhead changes to improve returns.

Cheshire however said there is need to ensure that the company’s cash and capital is deployed more productively, while tightening the control of costs.

Other leading retailers also declined. Next Plc shed 3.91%.

Leading Gainers and Losers

Of the FTSE 100 index stocks, Imperial Tobacco led gainers with a rise of 9.07% followed by gains of 7.21% in Vedanta Resources, of 5.74% in British Energy, of 3.92% in Rio Tinto Plc, and of 3.92% in Carphone Warehouse.

Imperial Tobacco rose on reports the company is planning to bid 910 million euros to fully takeover Spanish cigarette company Compania de Distribucion Integral Logista SA.

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