UK Stocks Weak on Euro-Zone Worries

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

U.K. stocks decline amidst concerns about the euro-zone debt crisis. U.K. Chancellor plans

[R]4:00 PM London, 11:00 AM New York – U.K. stocks decline amidst concerns about the euro-zone debt crisis. U.K. Chancellor plans £ 6.2 billion spending cuts. Standard Chartered aims to raise as much as £406 million through the bank''s first share listing in India.[/R]

U.K. stocks closed lower on the ongoing euro-zone financial and fiscal crisis. The pound traded higher after Chancellor of the Exchequer George Osborne announced spending cuts aimed at reducing the UK budget deficit.

Standard Chartered aims to raise as much as £406 million through the bank''s first share listing in India.

Real estate investment trust, Equity One Inc. said on Sunday it has agreed to acquire Capital and Counties USA Inc. through a $600 million joint venture transaction with its parent company, U.K.-based Capital Shopping Centers Group Plc.

Cranswick plc net profit rises.

Sterling rose 1.1% to 86.03 pence per euro. The pound fell 0.5% to $1.4391 from $1.4460.

In London FTSE 100 Index closed lower 2.95 or 0.06% to 5,059.98 and the pound edged lower to close at $1.435 and edged higher to close at €1.161.

Oil stocks led the decliners even though the price of crude oil closed higher. Banking, brokerage, and real estate stocks declined, while gold stocks traded higher along with the price of the precious metal.

U.K. Chancellor of the Exchequer George Osborne today detailed a £6.25 billion spending reduction plan for this year that aims to slash a record deficit without affecting the quality of the key frontline services.

Out of the planned £6.25 billion savings, £500 million of savings will be recycled and invested in apprenticeships, social housing and education. The government will save £1.15 billion in discretionary areas like consultancy and travel cost and around £2 billion from IT programs.

The government plans to save at least £20 million from a recruitment freeze across the civil service for the rest of 2010-11. In addition, £1.165 billion of savings will be made in Local Government by reducing grants to Local Authorities to reflect their contribution to the £6.2 billion.

Standard Chartered aims to raise as much as £406 million through the bank''s first share listing in India. The listing from the UK bank, which specializes in emerging markets, will be at the low end of initial forecasts amid jittery global markets. According to local economists, India, which is the third-largest economy in Asia, is expected to expand between 7% and 8% in the year to March 2011.

Real estate investment trust Equity One Inc. said that it has agreed to acquire Capital and Counties USA Inc. through a $600 million joint venture transaction with its parent company, U.K.-based Capital Shopping Centers Group PLC.

The transaction, expected to close late in the third quarter of 2010, enables Equity One to enter the California market, in line with the company''s strategic plan.

Under the deal, Capital Shopping Centers will receive 4.1 million shares of Equity One common stock and 10.9 million joint venture units. CSC may redeem its units in the joint venture for Equity One common stock on a one-for-one basis or cash, at Equity One''s option.

Equity One will assume about $330 million of mortgage debt, including its proportionate share of debt held by its joint ventures, with a weighted average interest rate of 5.7%.

David Fischel, the CEO of CSC, will join Equity One''s board of directors following the closing of the transaction.

Fischel said, ""This transaction allows us to focus on our core business in the United Kingdom while providing an expansion platform for Equity One. By retaining a long-term investment in Equity One, we can participate in the significant growth potential of the combined enterprise.""

Turner Newton, who has been CEO of C&C USA since 1994, will continue to lead this subsidiary for Equity One. Equity One intends to retain the majority of the in-place infrastructure, including C&C USA''s operating, acquisition and asset management teams.

Gainers & Losers

Aurelian Oil & Gas PLC, the oil and gas explorer and producer rose 1.9% to 40.25 pence.

Albemarle & Bond Holdings PLC, the pawnbroker traded unchanged at 240.00 pence.

BP Plc, the international oil and gas explorer fell 0.1.6% to 43.86 pence as it faces more U.S. regulatory scrutiny and struggles to contain the oil spill at an offshore platform near Louisiana coast line.

British Airways Plc, the airline carrier rose 0.9% to 190.20 pence.

Chloride Group PLC rose 0.8% to 286.70 pence after the supplier of power solutions said fiscal year 2010 revenues rose 3% to £336.0 million from £326.7 million a year ago. Net profit for the year fell 26% to £19.6 million or 7.6 pence per diluted share compared to net profit of £26.6 million or 10.5 pence per share a year ago.

Cranswick plc rose 3.7% to 824.50 pence after the pork products supplier said fiscal year 2010 revenues rose 22% to £740.3 million from £606.8 million a year ago. Net profit for the year rose 72% to £32.6 million or 69.8 pence per diluted share compared to net profit of £19 million or 41.1 pence per share a year ago.

Elementis plc, the specialty chemicals company rose 9.1% to 65.50 pence.

First Derivatives plc fell 2.2% to 286.00 pence. The software and support services provider said 2009 revenues rose 45% to £25.5 million from £17.5 million a year ago. Net profit for the year rose 22.6% to £3.8 million or 25.8 pence per diluted share compared to net profit of £3.1 million or 22.2 pence per share a year ago.

Invensys plc rose 0.1% to 287.20 pence. The engineering firm said fiscal year 2010 revenues fell 2% to £2.24 billion from £2.28 billion a year ago. Net profit for the year rose 13% to £147 million or 18.1 pence per diluted share compared to net profit of £130 million or 16.1 pence per share a year ago.

Lonmin Plc, the platinum producer fell 1.2% to 1,615.00 pence.

Polo Resources Limited increased 6.6% to 4.00 pence after the mining company signed a memorandum of understanding to sell its 50% interest in a joint venture with Peabody Energy that covers a collection of uranium and coal interests in Mongolia.

SThree plc, the recruitment firm fell 0.5% to 302.90 pence.