UK Inflation, Retail Prices Ease

Arthi Gupta, Mayank Mehta and Sanjay Barot
07 Jul, 2010
New York City

The UK indexes traded higher in a choppy trading after latest read on food prices and retail prices showed a decline. Shire Plc gets US regulatory approval of hyper activity disorder treatment. Smiths Group enters into deal with the trustees of its two pension schemes.

[R]4:00 PM London – The UK indexes traded higher in a choppy trading after latest read on food prices and retail prices showed a decline. Shire Plc gets US regulatory approval of hyper activity disorder treatment. Smiths Group enters into deal with the trustees of its two pension schemes.[/R]

U.S. stocks rallied and European markets traded lower after rallying sharply in the previous session. Banks were in trading focus after the regulators prepare stress test procedures.

In London FTSE 100 Index traded higher 40.04 or 0.81% to 5,005.04 and the pound edged lower to close at $1.510 and edged higher to close at €1.202.

UK inflation slowed slightly in June, according to the latest report from the British Retail Consortium. The BRC said today that overall shop price inflation was 1.5% in June compared to the May increase of 1.8%.

Food price inflation was 1.7% in June, down from 2.2% in May. Non-food inflation fell to 1.4% in June from 1.6% in May.

Shop price inflation in Britain eased in June as the impact of fluctuations in commodity costs and exchange rates subsided, according to the latest report from the British Retail Consortium. A separate survey found that demand for workers in the U.K. remained strong in June.

The British Retail Consortium said shop prices were 1.5% higher in June than a year ago, slower than the 1.8% increase in May. Food price inflation slowed to 1.7% from 2.2%, while non-food inflation eased to 1.4% from 1.6%.

Public sector pensions in the UK cost twice as much to provide than previously thought and require a drastic overhaul to reduce the burden on taxpayers, a commission has warned.

The Public Sector Pensions Commission said pensions in the public sector are worth 40% of a public sector worker''s salary on average. But the amount contributed by the workers makes up a mere 6% of the total with another 14% coming from employers.

Public sector pensions could cost the government up to £35 billion in the next financial year, the commission said.

Shire Plc said the U.S. Food and Drug Administration approved Daytrana or methylphenidate transdermal system for the treatment of Attention Deficit Hyperactivity Disorder in adolescents aged 13 to 17 years.

""The FDA approval of Daytrana for adolescents now extends this medication option to an additional group of ADHD patients who may benefit from ADHD treatment delivered by a patch,"" said Mike Yasick, senior vice president of the Shire ADHD business unit.

According to the company, the efficacy of Daytrana was demonstrated in a multi-center, 7-week, phase 3b, randomized, double-blind, placebo-controlled study in 217 adolescents aged 13 to 17 diagnosed with ADHD.

Smiths Group Plc announced that the company and the trustees of its two major UK pension schemes, Smiths Industries Pension Scheme or SIPS and the TI Group Pension Scheme or TIGPS, have agreed 10-year funding plans

The plans require the following separate contributions from Smiths Group like cash contributions to SIPS of £36 million a year for 10 years, subject to subsequent triennial valuations, and an initial investment of £25 million in index-linked gilts which would be held in an escrow account with a further ongoing monthly investment of £2 million for 9 years commencing July 2011.

Also, the plans require a conditional cash contribution to TIGPS of up to £50 million payable in May 2012, with further biannual installments of £8 million thereafter

Gainers & Losers

3i Group plc fell 0.6% to 261.40 pence after the publicly traded private equity firm said that despite uncertain markets, the business continues to perform well.

Aquarius Platinum Limited fell 6.2% to 295.00 pence after the mining company said that five employees of the mining contractor, Murray and Roberts Cementation died yesterday at its Marikana platinum mine when a shaft collapsed.

Autonomy Corporation plc fell 0.6% to 1,821.00 pence after the global infrastructure software company said it has entered into a significant license agreement with Kraft Foods Inc. to license Autonomy''s Intelligent Data Operating Layer software.

Aveva Group plc fell 0.3% to 1,181.00 pence after the IT firm said it has continued to trade in line with the board''s expectations.

Big Yellow Group PLC fell 0.7% to 302.40 pence after the storage firm said first quarter total store revenue for the 51 stores rose 10% to £14.4 million from £13.1 million for the same quarter last year. The group said it has enjoyed a robust quarter with a particularly strong June and expects reasonable trading over the next few weeks.

Booker Group Plc fell 0.9% to 40.62 pence after the food wholesaler said total sales in the 12 weeks to 18 June rose 4.9% in the same period last year. Tobacco sales rose 5.5% while non-tobacco sales were 4.5% higher. On like-for-like basis, total sales rose 4.8%, non-tobacco sales rose 4.3% and tobacco sales rose 5.5%.

Carillion plc fell 2.1% to 307.10 pence after the support services company said that they expect market conditions to remain challenging and remain on track to make further progress in the second half of 2010 in line with market expectations.

Clinton Cards Plc fell 5.2% to 36.00 pence after the specialty retailer of greetings cards experienced weaker trading. Total sales are expected to be about 2% below the board’s previous expectations.

DS Smith plc rose 0.5% to 126.70 pence after the paper and plastic packaging firm announced today that it has submitted a binding offer for the proposed acquisition of Otor, a corrugated packaging company in France.

Idox plc fell 2.1% to 11.50 pence after the public sector software and services supplier said fiscal 2010 revenues fell 4.5% to £15.0 million from £15.7 million a year ago. Net profit for the year rose 17% to £1.4 million or 0.42 pence per diluted share compared to net profit of £1.2 million or 0.35 pence per share a year ago.

Investec plc fell 1.0% to 439.90 pence after the international banking group announced that it has received a number of expressions of interest from potential acquirers for Rensburg Fund Management Limited.

Lookers plc rose 1.0% to 49.75 pence after the motor retail company reported that trading to the end of June is ahead of budget and the same period in the prior year, and expects group results for the half year to exceed management''s expectations.

Marks and Spencer Group plc fell 3.9% to 338.70 pence after the clothing retailer said first quarter group sales rose 4.4% and same store sales in UK sales rose 3.6%. Total UK sales increased 4.8%, general merchandise sales rose 7%, clothing sales rose 7.4%, home sales up 4.1%; and food sales increased 2.9%.

Smiths Group plc, the global technology company fell 0.9% to 1,067.00 pence.

Tullow Oil plc fell 1.5% to 1,066.00 pence after the independent oil and gas explorer announced that Uganda approved the sale by Heritage Oil & Gas Limited of its 50% interest in Blocks 1 and 3A in to subsidiary, Tullow Uganda Limited subject to conditions.

Xstrata PLC fell 3.2% to 876.10 pence after the diversified mining company approved an investment of $1.47 billion to develop the Antapaccay copper project as a major long-life, low cost brownfield expansion to the Tintaya copper mine in southern Peru.