UK Stocks Decline; BP Cleanup Costs Soar

Arthi Gupta, Mayank Mehta and Sanjay Barot
28 Jun, 2010
New York City

The UK indexes fall despite gains by miners. UK home price edges up 0.1% in June. G20 leaders agree to balance fiscal consolidation with the need to maintain pro-growth economic policies. BP Plc estimates $2.7 billion cleanup costs for the Gulf of Mexico oil spill.

[R]5:00 PM London – The UK indexes fall despite gains by miners. UK home price edges up 0.1% in June. G20 leaders agree to balance fiscal consolidation with the need to maintain pro-growth economic policies. BP Plc estimates $2.7 billion cleanup costs for the Gulf of Mexico oil spill.[/R]

In London FTSE 100 Index traded higher 20.80 or 0.41% to 5,067.27 and the pound edged higher to close at $1.504 and edged higher to close at €1.219.

World leaders at the G20 summit in Canada urged financial institutions to hold huge amounts of ''high quality'' capital to act as a cushion against another financial crisis.

The G20 communiqué agreed that all countries should ensure taxpayers are not stuck with the bill when banks fail - but left it up to individual countries to decide how they want to do that.

The group of 20 leaders endorsed targets to cut deficits by at least half by 2013 and to stabilize deficits by 2016. That was a big win for Britain, which has the largest budget deficit in the G-20.

Chancellor George Osborne hailed the agreement to give banks a breathing space to prepare for the new rules, which will not come into force before 2012.

Osborne insisted that there would be no ''flight'' of banks from the UK to other countries not imposing a bank tax as a result. “I am confident London remains a good place to come and do financial services,” he said.

UK home prices recorded only a slight growth as the supply of property exceeded demand in June, a closely watched survey revealed today.

UK home prices edged 0.1% in June from the previous month, following a 0.2% rise in May, according to a survey conducted by Hometrack. Annually, house price inflation increased to 2.1% from 2% in May.

Activity in the UK financial services increased in the last three months at the fastest rate since September 2007, a survey carried out by Confederation of British Industry and PricewaterhouseCoopers showed.

A balance of 9% reported an increase in business volumes during three months to June, which was the biggest positive balance since September 2007, but was far weaker than expected. For the coming three months, a balance of 63% expects a rise in business volumes, the most positive expectation since December 1993.

BP Plc issued an update on developments in response to the oil well incident in the Gulf of Mexico. The company is now in the process of drilling a relief well in its latest effort to curb the leaking oil.

The company noted that two systems continue to collect oil and gas flowing from the Deepwater Horizon''s failed blow-out preventer and transport them to vessels on the surface.

The company stated that lower marine riser package containment cap takes oil and gas to the Discoverer Enterprise where oil is collected and gas is flared. The second system takes oil and gas to the Q4000 vessel on the surface where both oil and gas are flared. On June 26, a total of about 22,750 barrels of oil were collected or flared by the two systems and 52.9 million cubic feet of gas were flared.

Further, work on the first floating riser containment system, which will be connected to the Helix Producer vessel, remains on schedule. It is currently anticipated that this system will be available to begin first operations at the end of June or in early July. The system is intended to provide additional oil containment capacity in range of about 20 thousand to 25 thousand barrels a day.

BP said that more than 80,000 claims have been submitted and almost 41,000 payments have been made to date, totaling more than $128 million.

Gainers & Losers

BP Plc, the oil and gas company rose 3.6% to 315.65 pence.

British Airways Plc rose 0.9% to 209.10 pence.

BT Group plc fell 0.3% to 130.30 pence. The telecom carrier and Sky have signed a contract for the wholesale supply of Sky Sports 1 and Sky Sports 2 to BT.

Cobham plc rose 0.09% to 222.80 pence after the defense contractor was awarded a $17.4 million contract from Raytheon Missile Systems to manufacture microwave modules used in a ground-to-ground or air-to-ground missile application.

Cohort plc rose 1.4% to 102.00 pence after the defense technology firm said fiscal year 2010 revenues rose 2% to £78.1 million from £76.7 million a year ago. Net profit for the year fell 39.5% to £2.3 million or 5.62 pence per diluted share compared to net profit of £3.8 million or 9.21 pence per share a year ago.

Creston plc rose 3.5% to 103.50 pence. The communications firm said fiscal year 2010 revenues fell 4% to £80.5 million from £83.8 million a year ago. Net profit for the year fell 23% to £5.1 million or 8.74 pence per diluted share compared to net profit of £6.6 million or 12.02 pence per share a year ago.

PartyGaming plc fell 1.5% to 247.00 pence. The online gaming company announced it has been awarded licenses by ARJEL, the French gaming regulator, to operate online poker and sports betting websites for residents in France.

Premier Oil plc, the independent exploration and production company rose 8.2% to 1,280.00 pence.

QinetiQ Group plc, the defense technology group rose 0.6% to 117.70 pence.

Rentokil Initial plc rose 0.4% to 115.90 pence after the pest control expert announced today the acquisitions of Knightsbridge Guarding Holdings Limited and Perception UK LLP for a total cash consideration of £6.9 million.

Senior plc, the engineering firm fell 3.3% to 126.30 pence.

SOCO International plc, the international oil and gas explorer rose 0.5% to 407.10 pence.

Standard Chartered Plc fell 0.8% to 1,727.00.

Taylor Wimpey plc, the housebuilder rose 0.6% to 30.60 pence.