[R]1:00PM New York, 6:00PM London – UK stocks fell after the annual trade and service deficit rises 10% in 2007. Producer price inflation jumps 5.7% in January.[/R]

Stocks in London trading fell after a report on manufacturing showed that producers passed on rising inflation from oil and gas prices to consumers. The producer price index jumped the most in 17 years. Annual trade deficit in goods and services in 2007 rose to £51.0 billion, an increase of 10%.

Market Sentiment

In London trading FTSE100 stocks fell 1.32% or 76.3 to 5,707.70.

Of the 102 FTSE 100 stocks 19 gained and 83 dropped. William Morrison led advancers with a rise of 1.39% followed by a rise of 1.3% in GlaxoSmithKline.

UK Trade Deficit Rises in December

The Office of National Statistics reported today that UK’s deficit on trade in goods and services narrowed from the revised deficit of £4.8 billion in November to £4.7 billion in December.

Surplus on trade in services slipped to £2.9 billion from £3.1 billion in November, while the deficit on trade in goods was £7.6 billion, compared with a revised deficit of £7.9 billion in November.

According to the statistics office, exports fell by £200 million and imports fell by £500 million in December.

The trade deficit with the EU was unchanged from the previous month at £3.5 billion. Furthermore, both exports and imports gained by £200 million.

Although there were increases in exports of oil and chemicals, exports of capital goods declined. Also, there were rises in imports of chemicals and cars, but imports of oil were lower.

Deficit with non-EU countries narrowed to £4.1 billion compared with the £4.4 billion in November, with exports falling by £400 million and imports falling by £700 million. While there was a rise in imports of fuels other than oil, imports of oil and aircraft fell.

On the overall, the volume of exports, excluding oil and erratic items was 3.5% lower in December than in November.

UK’s deficit on goods and services in 2007 rose to £51.0 billion from £46.4 billion the 2006.

Producer Price Inflation Rises in January

Separately, ONS also reported today that output price annual inflation for all manufactured products jumped 5.7% the most since 1991, while input price annual inflation rose to 19.1%, the most in 12 years, from 12.2% in January.

In addition, the output prices measure for all manufactured products grew 1% month-on-month in January. The ''narrow'' output prices measure, excluding volatile sectors, increased 3.1%.

Input prices measure of UK manufacturers’ materials and fuels advanced 2.9% month-on-month on increases in crude oil prices. The index rose 2.6% between December and January. The ''narrow'' input prices measure rose 7.3% year-on-year and gained 2.3% in seasonally adjusted terms between December and January.

Gainers and Losers

William Morrison led gainers in the FTSE 100 stocks with a rise of 1.39% followed by rises in GlaxoSmithKline of 1.31%, in Compass Group of 1.23%, in Smith & Nephew of 1.14%, and Imperial Tobacco of 0.97%.