Newspaper article The Evening Standard (London, England)

Footsie Unshaken by Huge Rise in American Jobless

Newspaper article The Evening Standard (London, England)

Footsie Unshaken by Huge Rise in American Jobless

Article excerpt


A DRAMATIC rise in the number of Americans who lost their jobs last month saw the US unemployment rate today rise to its highest in 25 years and raised fresh fears about the health of the world's biggest economy.

According to the latest figures, US bosses axed 651,000 in February, with unemployment reaching 8.1%.

However, the figures were not as bad as some had predicted; the most pessimistic had pencilled in up to 750,000 job losses.

With stock markets already braced for bad news, the figures failed to derail London shares and the FTSE 100 managed to hang on to modest gains.

The blue-chip index was 18.93 points higher at 3548.79. However, no one is expecting this to develop into a substantial rally. Broke r Morgan Stanley cut its 12-month forecast for the FTSE 100 from 4300 to 3500.

British Telecom could be forced to pour an extra [pounds sterling]750 million a year into the company pension pot if the board of trustees takes a severely conservative position.

Even a moderate view could still see annual top-up contributions of about [pounds sterling]500 million -- something that is beginning to weigh heavily on investors' minds. Morgan Stanley advised clients to get out of the telecoms giant and downgraded it to underweight from overweight.

It calculates that the pension fund had a hole of about [pounds sterling]6.6 billion at the end of last year, but further market falls mean the figure today is probably closer to [pounds sterling]8.8 billion and could reach [pounds sterling]10 billion.

"With pension assets of about [pounds sterling]30 billion and a market cap of [pounds sterling]7 billion, BT's sector-relative and absolute performance will be driven more than ever by market direction," says analyst Christopher Fremantle.

The shares were down 4.8p, or 6%, at 78.6p. Morgan Stanley has slashed its target to 110p from 160p.

Insurance stocks were hammered for a second day as investors worried that unrealised losses will soon undermine current valuation assumptions.

Friends Provident, down 13.5% yesterday, was the biggest loser, off another 14% at 52p, while Aviva saw another 11% sliced off its share price. …

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