UK Indexes Gyrate; Chloride Accepts Emerson Bid

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

The UK indexes trade sideways after European banks borrowed less than expected from the ECB. UK business investment grows 7.8% in the first quarter and coalition budget to cost 1.3 million jobs.

[R]4:30 PM London – The UK indexes trade sideways after European banks borrowed less than expected from the ECB. UK business investment grows 7.8% in the first quarter and coalition budget to cost 1.3 million jobs.[/R]

UK home price inflation eases more than expected and consumer confidence drops to -19 in June.

Standard Chartered Bank plans to invest $500 million in the Agricultural Bank of China.

In London FTSE 100 Index traded lower 0.53 or 0.01% to 4,913.69 and the pound edged lower to close at $1.501 and to close at €1.223.

The UK economy is in a ""tentative"" recovery state and could still slip back into recession as a result of Europe''s collective austerity drive, Bank of England policy maker Adam Posen has warned.

The central banker said the British economy is facing up to two outlooks: One, in which Europe''s budget squeeze will hurt domestic growth and plunge the economy back into recession, and another, in which growth in the rest of the world will drive the domestic recovery.

UK Chancellor George Osborne''s austerity budget will result in the loss of up to 1.3 million jobs across the economy over the next five years, the Guardian newspaper says, citing a leaked Treasury report.

According to the newspaper, a private assessment by the Treasury found that the deep spending cuts unveiled by the coalition government will cost between 500,000 and 600,000 jobs in the public sector, and up to 700,000 jobs in the private sector by 2015. The Treasury estimates that 2.5 million jobs will be created in the private sector over the same period.

UK business investment increased by 7.8% sequentially in the first quarter, revised up sharply from 6%, according to a final report from the Office for National Statistics released today. The first quarter investment was £29.13 billion. On a yearly basis, business investment declined 7.7% in the first quarter.

UK house prices rose less than expected in June as the supply of property coming to the market increased amid the abolition of the Home Information Packs, while demand remained broadly stable.

The price of a typical UK property increased by a seasonally adjusted 0.1% month-on-month in June, following a 0.5% rise in May, according to data released by the Nationwide Building Society on Wednesday.

Average house prices in June stood at £170,111. The year-on-year growth in house prices eased to 8.7% from 9.8% in May. The expected increase for June was 9%.

Sentiment among British consumers weakened in June on the back of growing concerns over government spending cuts and tax hikes in the run up to the emergency budget unveiled by the new government.

An index measuring consumer confidence in the United Kingdom came in at -19 in June, the monthly GfK/NOP survey revealed today, marking its lowest score so far this year.

The reading for the overall economic situation over the past year slid to -46 from -45, while expectations for the next 12 months fell to -12 from -9.

Standard Chartered Plc announced that Standard Chartered Bank would invest $500 million as a cornerstone investor in Agricultural Bank of China Limited''s H-Share Initial Public Offering or IPO in Hong Kong. The two banks recently inked an agreement to develop new business opportunities together.

The investment would be financed from internal cash resources for the HK$500 million.

Peter Sands, Group chief executive of Standard Chartered, commented, ""This investment is a natural next step in our longstanding relationship and it underpins our recent agreement to develop business together.""

Chloride Group said its board has concluded that Emerson Electric Co.''s cash offer of 375 pence per share is a superior proposal compared to ABB''s 325 pence per share offer.

Gainers & Losers

AstraZeneca Plc rose 9.0% to 3.210.50 pence after the biopharmaceutical company announced the court’s decision that the substance patent protecting CRESTOR is valid and enforceable.

Biocompatibles International plc fell 3.8% to 250.00 pence after the medical technology company announced the decision of its licensee and marketing partner, Merz Pharmaceuticals GmbH, to temporarily suspend shipments of Novabel.

BHP Billiton plc fell 1.4% to 1,746.50 pence after the diversified natural resources company today welcomed the Australian Competition Tribunal’s decision to reject the application for declaration of its Newman rail line while expressing its disappointment at the decision to grant declaration of BHP Billiton’s Goldsworthy rail line under Part IIIA of the Trade Practices Act.

Cineworld Group plc rose 0.5% to 202.50 pence after the cinema chain reported good growth in the first half of 2010 with revenues up 3.7% despite a reduction in cinema going during the World Cup tournament.

Clarkson PLC, the shipping services company rose 3.9% to 894.00 pence.

HMV Group plc rose 0.8% to 61.00 pence after the retailer of entertainment products said fiscal year 2010 revenues rose 3% to £2.02 billion from £1.96 billion a year ago. Net profit for the year rose 11% to £49.2 million or 11.6 pence per diluted share compared to net profit £44.2 million or 10.7 pence per share a year ago.

H&T Group plc rose 4.1% to 262.50 pence after the pawnbroker announced that year-to-date trading from both the group''s core business and the new stores continues to perform in line with the board''s expectations.

Hunting Plc rose 1.9% to 450.60 pence after the oil services specialist said that despite current events in the Gulf of Mexico and sluggish natural gas prices, overall trading in the first half of 2010 has been very positive.

Northgate plc surged 11.8% to 171.75 pence. The vehicle rental company said fiscal year 2010 revenues fell 3% to £749.6 billion from £770.5 million a year ago. Net profit for the year was £24.3 million or 22.8 pence per diluted share compared to net loss £185.7 million or 560.0 pence per share a year ago.

Rio Tinto Plc rose 0.3% to 3,060.00 pence after the mining company confirmed today that it has given notice to Ivanhoe Mines Ltd. that it is exercising all of its Series A warrants which will increase Rio Tinto''s ownership of Ivanhoe shares by 7.3% to 29.6% and provide sufficient funds to Ivanhoe to continue the development of the Oyu Tolgoi copper and gold complex as currently scheduled.

SDL Plc fell 0.02% to 469.90 pence after the provider of global information management solutions announced today the acquisition of Xopus, the leader in online XML editing.

Standard Chartered PLC, the bank rose 0.8% to 1.674.00 pence.

Vedanta Resources plc rose 0.6% to 2,182.00 after the mining company’s subsidiary, Sterlite Industries (India) Limited today announced that its wholly owned subsidiary Sterlite Energy Limited has successfully lighted the boiler for the first unit of 600 MW of its 2,400 MW Independent Power Plant at Jharsuguda, Orissa.