UK stocks decline Tuesday as utility companies announce falls in revenue

January 28th, 2009 by admin | Filed under Daily News, Employment, Recession, Retail, Stocks and shares, UK Bank Accounts, UK Banks.

The minor upturn that U.K. stocks had been experiencing over the last three days suffered a minor reverse yesterday. The fall was hastened by the announcement that the U.K.’s second later water utility company Severn Trent Plc announced that their income forecast for 2009 will be much lower than previously forecast.

Shares in Severn Trent dropped by 3.5 percent on this news, with rival utility suppliers falling under a similar spotlight. Those whose shares took a downturn included United Utilities Group Plc and Pennon Group Plc, both whose shares declined by more than 2.5 percent.

Reasons given for the downturn included falling commercial and domestic consumption.

Other stock values that fell on the U.K. stock market yesterday included:

AstraZeneca Plc who dropped by 3.9 percent (115 pence to 2,832) after the US drug maker was asked to strengthen warnings about potential side effects on its antipsychotic medicine Seroquel.

Property group Workspace who as their name suggests specialize in renting space to small businesses, announced the launch of an almost £90 million share issue on Tuesday. It was expected that the share issue would spark off a wave of cash calls as cash strapped property companies attempt to bolster their balance sheets.

Workspace announced that the five-for-one issue was fully underwritten and would allow the extension of a key August 2010 credit facility to November 2012.

Under terms of the deal, new shares will be offered to shareholders at 10 pence per share on the basis of five new ordinary shares for each existing share.

Workspace shares, which have fallen by 88 percent in the past 12 months, were trading 7.7 percent lower at 30 pence.

The star of the show yesterday on the FTSE was Barclays Bank whose shares rocketed by a massive 73 per cent yesterday. This dramatic surge in value came after the bank took the unprecedented steps in an open letter of reassuring investors and shareholders that the bunk would remain both well funded and profitable for the foreseeable future.

Chief executive John Varley and chairman Marcus Agius jointly announced that Barclays was on track to exceed 2008 market forecasts of GBP 5.3 billion and added that the bank had no need for government assistance.

Barclay’s shares immediately raised 37.5p to 88.7p by the close.

Other banks also rallied with Lloyds Banking Group up 32 per cent, (15.9p, to 65.2p), Royal Bank of Scotland rose 20 per cent, (2.4p to 14.5p) and HSBC also rose by around 20 per cent (25.5p to 541p.)

On the industrial front Charter International Plc rose by 5 percent (16.5 pence to 348.25.) Charter, Europe’s largest manufacturer of welding equipment announced that its annual profit was higher than previous estimates, largely due to cutting overheads, particularly work force at ESAB, their welding and cutting unit

The FTSE 250 index rose by 1.49% or 93.35 points to 6351.92 The FTSE 100 finished the session 3.9 per cent, or 156.5 points, higher at 4,209.

Sterling continued to hold firm against the leading currencies:

Pound/US dollar 1.4267

Pound/Euro 1.0776

Pound/Japanese Yen 127.38
Wall Street shares advanced on Mondays trading largely on the announcement that pharmaceutical giant Pfizer planned acquisition of Wyeth, for a tidy $68 billion. The fact that a deal of this size can still go through even in the worst of recessions appeared to reassure investors and set trades rolling. Overall there was a mixed bag of news from companies. Downbeat comments from Caterpillar about the health of its business and warnings of substantial job cuts from Home Depot threw a wet blanket on earlier optimism.

The Dow Jones Industrial Average rose 38.47, or 0.48 per cent, to close at 8,116.03.