U.K. Stocks Gain, Sainsbury Net Rises

Arthi Gupta, Mayank Mehta and Sanjay Barot
13 May, 2010
New York City

U.K. stocks gain on commodity prices and positive earnings momentum. Coalition government takes first step to curb budget deficit. UK trade deficit rises in March and mortgage repossessions falls in first quarter. Tullett Prebon said takeover talks terminated.

[R]4:00 PM London, 11:00 AM New York – U.K. stocks gain on commodity prices and positive earnings momentum. Coalition government takes first step to curb budget deficit. UK trade deficit rises in March and mortgage repossessions falls in first quarter. Tullett Prebon said takeover talks terminated.[/R]

U.K. stocks gain on positive earnings momentum. Coalition government takes first step to curb budget deficit. UK trade deficit rises in March and mortgage repossessions fall in first quarter. Tullett Prebon takeover bid terminated.

In a bid to curb the budget deficit, Britain''s new coalition government cut its pay by 5% as it prepares to cut a budget deficit running at more than 11% of GDP.

Prime Minister David Cameron will have an annual salary cut to £142,500 from £150,000, while senior ministers will be paid just under £135,000. Ministers'' pay will be frozen for the five-year lifetime of the parliament and save a total of £3 million.

The pound fell to a 2-day low of 1.6389 against the franc and 0.8552 against the euro and a 6-day low of 1.4700 against the dollar.

The government auctioned £1.1 billion of 1.875% index-linked gilts due in 2022 this morning.

Gilt futures rose today, outperforming German bunds, as the new government''s pledge to go ahead with £6 billion of public spending cuts provided further support to UK government bond prices.

And the cost that investors pay to protect against a potential default of British debt fell to $74,000 for each $10 million of debt, down $3,500, according to data from Markit.

The UK trade deficit in goods and services increased to £3.7 billion in March, compared to deficit of £2.2 billion in February. The deficit on trade in goods increased to £7.5 billion in March compared to deficit of £6.3 billion in February.

U.K. home repossessions dropped to 9,800 in the first quarter from 10,600 in the previous quarter and 13,200 in the first quarter of 2009, a report published by the Council of Mortgage Lenders showed on Thursday.

The proportion of mortgages in arrears also decreased in the first quarter. The total proportion of loans with arrears equivalent to 2.5% or more of the mortgage balance was 2.38%, down from 2.52% in the previous quarter.

At the same time, the number of loans in arrears totaled 186,300 at the end of the first quarter of this year, down from 206,800 at the end of the first quarter of 2009.


Inter-dealer broker Tullett Prebon Plc said that discussions with a third party regarding a possible offer for Tullett has been terminated.

Tullett noted that it has not been possible to reach agreement on the terms of any offer and the third party has confirmed that it does not intend to pursue a possible offer at this time.

On March 10 Tullett confirmed that the company was in preliminary discussions with a third party regarding a possible offer. The company, however, did not reveal the bidder''s identity.

Tullett shares fell as much as 12% on the London Stock Exchange.

Food retailer Sainsbury Plc reported an increase in profit for the fiscal year 2010, as it recorded substantial increase in customers through new store openings. Looking ahead, the company expects that the environment would remain challenging and consumer spending would be under pressure.

In London FTSE 100 Index closed higher 30.27 or 0.56% to 5,413.72 and the pound edged lower to close at $1.482 and to close at €1.173.

Gainers & Losers

3i Group plc increased 6.5% to 285.70 pence after the private equity firm said fiscal year 2010 net profit was £154 million or 17.1 pence per diluted share compared to net loss of £1.95 billion or 318.7 pence per share a year ago.

AMEC plc, the engineering and project management company rose 2.2% to 840.50 pence.

BP Plc, the oil and gas company rose 0.1% to 48.50 pence.

BT Group plc rose 0.2% to 17.93 pence. The communications services company said fourth quarter revenues fell 2% to £5.36 billion from £5.47 billion a year ago. Net profit for the quarter was £208 million or 2.6 pence per diluted share compared to net loss of £1.01 billion or 13.0 pence per share a year ago.

Eurasian Natural Resources Corporation PLC added 2.2% to 1,120.00 pence.

Euromoney Institutional Investor PLC fell 1.4% to 510.00 pence after the business publisher said first half revenues fell 8% to £147.8 million from £160.7 million a year ago. Net profit for the first half was £26.6 million or 22.90 pence per diluted share compared to net loss of £21.2 million or 19.41 pence per share a year ago.

Holidaybreak plc, the education, leisure and activity travel group fell 1.9% to 277.00 pence.

J Sainsbury plc added 3.7% to 340.30 pence after the supermarket chain said fiscal year 2010 revenues rose 5.6% to £19.96 billion from £18.9 billion a year ago. Net profit for the year rose 102% to £585 million or 31.6 pence per diluted share compared to net profit of £289 million or 16.4 pence per share a year ago.

Melrose PLC, after the engineering conglomerate rose 0.8% to 231.40 pence.

Petrofac Limited, the oilfield support services group rose 0.7% to 1,142.00 pence.

Thomas Cook Group plc fell 2.1% to 237.00 pence after the travel operator first half revenues fell 5% to £3.31 billion from £3.48 billion a year ago. Net loss for the first half was £211.8 million or 24.8 pence per diluted share compared to net loss of £226.8 million or 26.5 pence per share a year ago.

Trinity Mirror plc, the newspaper publisher dropped 3.2% to 135.20 pence.

Tullett Prebon plc, the inter-dealer broker plunged 12.5% to 316.70 pence.