FTSE Falls 2.4%; Rate Decision Unanimous

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

U.K. stocks decline on concerns tighter regulation as Germany banned short-selling of some bonds. Bank of England was unanimous to keep rates at record low on May 10. Pearson plc buys Melorio. RBS announces sale of RBS Factor S.A. Land Securities, Experian PLC profits rise.

[R]4:00 PM London, 11:00 AM New York – U.K. stocks decline on concerns tighter regulation as Germany banned short-selling of some bonds. Bank of England was unanimous to keep rates at record low on May 10. Pearson plc buys Melorio. RBS announces sale of RBS Factor S.A. Land Securities, Experian PLC profits rise.[/R]

U.K. stocks decline on concerns over tighter regulation as Germany banned short-selling of some bonds. The sharp decline in commodity and oil prices coupled with a weaker euro also impacted market sentiment.

The pound rose to a 1-week high against the euro and a 6-day high against the Swiss franc. Meanwhile, the pound recovered from near a 2-week low against the yen and a 13- 1/2 - month low against the dollar. The pound-dollar pair is presently trading at 1.4360, compared to yesterday''s closing value of 1.4325.

Germany''s BaFin financial-services regulator temporarily banned naked short selling and naked credit-default swaps of euro-area government bonds. The ban also applies to naked short selling in shares of 10 banks and insurers that will last until March 31, 2011, BaFin said yesterday in an e-mailed statement.

BaFin said it was taking the step because of ""exceptional volatility"" in euro-area bonds. ""Massive"" short-selling was leading to excessive price movements which ""could endanger the stability of the entire financial system.""

""The euro is in danger,"" German Angela Merkel reportedly said ahead of the short selling ban.

German Chancellor Angela Merkel said in a speech to parliament that the euro was in danger and urged speedy action to stop market ""extortion,"" saying the European Union needed a process for ""orderly"" insolvency of its members.

""I''ll boil it down to its core,"" Ms. Merkel said. ""The euro is the foundation for growth and prosperity, along with the common market -- also for Germany. The euro is in danger.""

Bank of England''s policy makers unanimously decided to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion, the minutes of the meeting on May 10 showed today. All nine members also voted to hold the interest rate at a record low of 0.5%.

Publisher Pearson PLC said Wednesday it has struck a deal to buy London-based training firm Melorio PLC for £99.3 million or $142.4 million in a move to increase the exposure in vocational-education sector.

The acquisition comes two weeks after Pearson netted $2 billion before tax by selling a 61% stake in financial-information firm.

Royal Bank of Scotland Group plc said that it has agreed the sale of RBS Factor S.A. to GE Capital. The transaction is subject to regulatory approval and expected to complete in third-quarter 2010.

RBS Factor S.A. which is the RBS factoring business in France, had gross assets of about €606 million as at 31 December 2009.

The sales complete the disposal of the company''s factoring businesses in Continental Europe and represent further progress against the RBS strategic plan. The Group said that it continues to advance on a number of fronts in the disposal of its non-core assets.

RBS noted that it will continue to have a significant presence in France, focused on financing, advisory and risk management solutions for corporates, financial institutions and the public sector.

UK-based real estate investment trust Land Securities Group Plc reported a profit for fiscal 2010, turning around from a loss last year, driven by higher market value of properties amid improving market.

In London FTSE 100 Index closed lower 131.84 or 2.48% to 5,175.50 and the pound edged lower to close at $1.443 and to close at €1.168.

Gainers & Losers

Caledonia Investments plc fell 1.1% to 1,600.00 pence. The investment trust company said fiscal year 2010 net profit for the year was £299.3 million or 517.0 pence per diluted share compared to net loss of £300.6 million or 521.0 pence per share a year ago.

Experian PLC decreased 1.4% to 601.00 pence. The information services company said fiscal year 2010 revenues rose 0.3% to $3.88 billion from $3.87 billion a year ago. Net profit for the year rose 23.5% to $600 million or 58.1 cents per diluted share compared to net profit of $486 million or 47.5 cents per share a year ago.

ICAP plc fell 3.9% to 374.30 pence. The inter-dealer broker said fiscal year 2010 revenues rose 1.3% to £1.61 billion from £1.59 billion a year ago. Net profit for the year rose 34% to £116 million or 17.7 per diluted share compared to net profit of £175 million or 26.9 pence per share a year ago.

Land Securities Group plc fell 3.0% to 615.50 pence. The real estate investment trust said fiscal year 2010 revenues rose 1.5% to £833.4 million from £821.2 million a year ago. Net profit for the year was £1.09 billion or 143.96 pence per diluted share compared to net loss of £5.19 billion or 999.04 pence per share a year ago.

Mitchells & Butlers plc rose 1.2% to 307.20 pence after the operator of managed pubs and pub restaurants first half 2010 revenues rose 2% to £1.04 billion from £1.02 billion a year ago. Net profit for the first half was £52 million or 12.7 per diluted share compared to net loss of £6 million or 1.5 pence per share a year ago.

Pearson plc, the publisher fell 2.1% to 973.00 pence.

The Royal Bank of Scotland Group plc fell 3.3% to 45.74 pence.

Scottish and Southern Energy plc fell 1.4% to 1,067.00 pence after the electricity producer said fiscal year 2010 revenues fell 15% to £21.6 billion from £25.4 billion a year ago. Net profit for the year rose 1,000% to £1.24 billion or 133.9 pence per diluted share compared to net profit of £112.3 million or 12.8 pence per share a year ago.

Speedy Hire Plc fell 7.0% to 29.75 pence after the business-to-business support services company said fiscal year 2010 revenues fell 27.3% to £351.1 million from £482.7 million a year ago. Net loss for the year was £18.3 million or 4.37 pence per diluted share compared to net loss of £55.1 million or 29.57 pence per share a year ago.

Tullow Oil plc, the independent oil and gas explorer fell 2.4% to 1.099.00 pence.

UK Mail Group Plc rose 2.6% to 345.00 pence. The parcels and mail group said fiscal year 2010 revenues fell 0.1% to £385.2 million from £385.7 million a year ago. Net profit for the year rose 43% to £12.7 million or 23.0 pence per diluted share compared to net profit of £8.9 million or 16.2 pence per share a year ago.