London midday: Footsie falls on gloomy economic outlook

16th Nov 2011 12:07

With some gloomy economic data doing the rounds this morning, the Footsie experienced a sharp fall around 11:00, as the Bank of England cut its growth estimates for the UK economy. Unfortunately, the unemployment report did little to settle investors' nerves.Meanwhile, reports attributed to the Financial Times were circling the market speculating that Italian bank Unicredit's chief executive officer is meeting with the European Central Bank to ask for greater access to funding for Italian banks.ECONOMIC GROWTH TO STALL, JOBLESS RATE RISESThe Bank of England predicts a sharp fall in inflation from the start of 2012, but has warned the UK economy could be stagnant until the middle of next year. In its Quarterly Inflation Report the Bank said the UK was on track for inflation to come down to its 2% target during the second half of 2012. The Bank's Governor, Sir Mervyn King, said this would mean "the immense squeeze" on household incomes had reached its peak. The Bank also said the UK economy could be flat until middle of next year and it expected markedly weaker growth than it predicted in its August forecasts. It cut its 2011 and 2012 growth predictions to about 1%. According to the Office for National Statistics, the unemployment rate rose by 0.4 percentage points, or by 129,000 persons, to 8.3% in the third quarter. The consensus estimate was for a rise to 8.2% from 8.1% in the previous period. That is the highest reading since 1996 and the number of unemployed people, 2.62m, is the highest since 1994. ICAP, REED ELSEVIER PROVIDE A DRAGInter-dealer broker ICAP issued a veiled profit warning, saying that it should hit market expectations for full-year profit provided market conditions return to normal in the final quarter; the fourth quarter is traditionally one of the group's stronger trading periods. Reed Elsevier, the business information and data company, fell despite revealing a steady performance in the first nine months. Peel Hunt said the statement was "solid, if unexciting" - "Although the stock attracts a premium rating, we prefer the smaller Informa and UBM for their superior growth characteristics and lower valuations."In contrast, Intertek, the testing and quality assurance company, rose strongly after saying year-on-year organic revenue growth for the ten months to the end of October was 8%, in line with the figure published in the half year update in August. Aerospace and defence engineering firm Meggitt was gaining altitude after it said it has been awarded two separate contracts, one of which is worth £13m. Barratt Developments was a high riser on the mid-cap index after the house-builder saw reservations jump 25.9% in the period between July and the middle of November.RETAIL SECTOR SOLD OFFRetailers KESA, Home Retail, SuperGroup, Debenhams and Dixons Retail were all out of favour today, perhaps being weighed down by comments made by Mervyn King, as he issued his gloomy outlook on the UK economy. Meanwhile, accountancy firm Deloitte has said that it expects UK retail sales in December to be flat on last year at £36.2bn, the first holiday without growth since 2008, according to Bloomberg. "It's as tough as anyone can remember and with sales flat at best this year it's going to be harder than ever before to be in the winners' enclosure," said Ian Geddes, retail partner at Deloitte, in an interview with the news agency.BCFTSE 100 - RisersIntertek Group (ITRK) 1,943.00p +3.02%Meggitt (MGGT) 391.00p +2.12%Kingfisher (KGF) 252.90p +1.89%Cairn Energy (CNE) 292.00p +1.39%Serco Group (SRP) 500.50p +1.11%Tate & Lyle (TATE) 690.00p +0.88%Aggreko (AGK) 1,795.00p +0.84%ITV (ITV) 65.90p +0.61%GKN (GKN) 188.70p +0.59%Lonmin (LMI) 1,048.00p +0.38%FTSE 100 - FallersSchroders (SDR) 1,304.00p -4.40%ICAP (IAP) 351.70p -4.17%Schroders (Non-Voting) (SDRC) 1,096.00p -3.78%Vodafone Group (VOD) 173.85p -3.74%Essar Energy (ESSR) 263.50p -3.66%British Sky Broadcasting Group (BSY) 728.50p -3.19%Vedanta Resources (VED) 1,077.00p -2.80%Reed Elsevier (REL) 524.50p -2.42%Fresnillo (FRES) 1,823.00p -2.36%Burberry Group (BRBY) 1,316.00p -2.30%