UK GDP Expands 0.3%

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

The UK indexes gained after GDP expanded and BP reported positive developments. The UK Q1 GDP expanded at 0.3% and borrowing increased in May. BP is negotiating sale of assets and clean-up costs rises to $3.5 billion. Standard Chartered agrees to buy Singapore-based commercial financing unit of GE.

[R]4:00 PM London – The UK indexes gained after GDP expanded and BP reported positive developments. The UK Q1 GDP expanded at 0.3% and borrowing increased in May. BP is negotiating sale of assets and clean-up costs rises to $3.5 billion. Standard Chartered agrees to buy Singapore-based commercial financing unit of GE.[/R]

In London FTSE 100 Index traded higher 21.38 or 0.42% to 5,154.32 and the pound edged lower to close at $1.497 and edged higher to close at €1.189.

The UK economy expanded 0.3% sequentially in the first quarter, according to data released by the Office for National Statistics today. The first quarter growth figure was unchanged from the estimate published in May, but smaller than the 0.4% growth seen in the fourth quarter of 2009.

The British economy recorded positive growth in the fourth quarter of 2009, exiting from its longest recession since records began in 1955. The annual decline in gross domestic product for the first quarter was confirmed at 0.2%.

British current account deficit was £9.6 billion in the first quarter, according to the latest data from the Office for National Statistics released today. Revised data showed that the current account balance was a surplus of £0.5 billion in the fourth quarter of last year, the first current account surplus since the third quarter of 1998.

The current account deficit in the first quarter was 2.7% of gross domestic product. In the fourth quarter, the surplus accounted to 0.1% of GDP.

The number of loans made for home purchases in the UK rose in May, according to latest data. The Council of Mortgage Lenders said the number of loans taken for home purchases rose 2% in volume and 3% in value in May compared to April. On a yearly basis, home loans increased 15% in volume and 28% in value.

Mortgage refinancing increased 6% in volume and 10% in value in May compared with April.

UK services output rose 0.6% in the three months to April compared to the previous three months, according to reports released by the Office for National Statistics today. On an annual basis, there was an increase of 0.7% in the three months to April.

The output rose 4.5% in distribution, 0.2% in transport, storage and communication and 0.5% in government and other services.

On a monthly basis, output from the service sector fell 0.3%, following a 0.6% increase in March. The largest contribution to the decrease was transport, storage and communication which fell by 1.9% compared to the previous month.

Standard Chartered plc said today that it may acquire GE Commercial Financing Ltd. in Singapore, a specialist in factoring and hire purchase financing in Singapore. The company noted that the gross assets of the underlying business being acquired were S$183 million or $132 million equivalent, as at December 31, 2009.

Standard Chartered added that the acquisition will up-tier specialist advisory capabilities in its SME business and enhance the range of product and service solutions that can be offered to both new and existing small and medium sized customers in Singapore. The transaction is expected to be completed by the end of July 2010.

MRC Technology announced that it has entered into an agreement with Genentech Inc., a wholly owned member of the Roche Group for an exclusive license to a series of small molecule drug candidates for the potential treatment of neurological disease. Full financial terms and the target of the small molecule project have not been disclosed.

Under the terms of the agreement, MRC Technology will receive an upfront payment and is eligible to receive clinical development milestone payments and royalties on sales.

BP Plc. is in talks with independent oil and gas producer Apache Corp. to sell some assets including its Alaska oil fields, according to people familiar with the matter. Apache Corp. is negotiating for assets on a deal worth as much as $10 billion.

The Apache deal is one of a number of options BP is exploring in a broad capital-raising effort. BP has also secured new credit lines, and could also sell bonds, according to people familiar with the situation.

In a significant progress in containing the gush of crude oil from the ruptured oil well in the Gulf of Mexico, oil giant BP plc''s underwater robots are steadily assembling a tighter Capping Stack to the Deepwater Horizon blowout preventer after removing a defective cap.

The new containment procedure, which is expected to be completed within days, will ""more than triple our containment capacity when it''s all said and done,"" according to White House spokesman Robert Gibbs.

BP said on its Web site today that the 83-day-old oil spill has so far cost it a total of $3.5 billion. It includes containment costs, relief well drilling, grants to the Gulf states, claims paid, and federal costs.

Gainers & Losers

BP Plc rose 6.9% to 390.00 after the oil and gas explorer said the cost of the clean-up in the Gulf of Mexico amounts to approximately $3.5 billion, up from $3.12 billion a week ago and $2.65 billion two weeks ago.

Domino''s Pizza UK & IRL plc fell 1.4% to 397.00 pence after the pizza delivery company said first half revenues rose 24% to £91.3 million from £73.7 million a year ago. Net profit for the first half rose 30% to £12.1 million or 7.62 pence per diluted share compared to net profit of £9.3 million or 5.93 pence per share a year ago.

Falkland Oil and Gas Limited plunged 49.3% to 102.25 pence after the oil and gas exploration company focused on its extensive license areas to the South and East of the Falkland Islands.

Gulf Keystone Petroleum Ltd. rose 1.8% to 69.25 pence after the oil explorer announced the commencement of workover/testing operations on the Shaikan-1 discovery well.

Hyder Consulting PLC fell 2.9% to 335.00 pence after the advisory and design consultancy announced trading is slightly ahead of the board''s expectations.

Kier Group plc edged higher 5.4% to 990.50 pence after the integrated construction and property expects to report full year underlying profit before tax towards the upper end of current market expectations and ahead of last year''s result.

Immunodiagnostic Systems Holdings plc rose 2.6% to 770.00 pence after the producer of diagnostic testing kits said fiscal year 2010 revenues rose 49% to £37.2 million from £24.9 million a year ago. Net profit for the year rose 69% to £8.1 million or 28.93 pence per diluted share compared to net profit of £4.8 million or 18.57 pence per share a year ago.

Invista Foundation Property Trust Limited traded unchanged at 40.00 pence after the closed ended property investment company said fiscal year 2010 net rental income fell 22% to £25.0 million from £31.9 million a year ago. Net profit for the year was £34.7 million or 10.7 pence per diluted share compared to net loss of £184.06 million or 55.0 pence per share a year ago.

Petrofac Limited gained 1.0% to 1,249.00 pence after the international oil and gas facilities service provider has been awarded its first production enhancement services contract by Petrom in Romania.

Rio Tinto Plc fell 1.5% to 3,123.00 pence after the metal and mineral producer announced today that it has given notice to Ivanhoe Mines Ltd. caused by its adoption of the Shareholders Rights Plan related to its terms of private placement agreement.

Standard Chartered PLC fell 0.2% to 1,715.00 pence after the bank announced that Standard Chartered Bank signed an agreement to acquire GE Commercial Financing Ltd, a specialist in SME factoring and hire purchase financing in Singapore.

Thomas Cook Group plc fell 1.3% to 189.00 pence after the tour operator announced today that it agreed to acquire 100% of Öger Tours GmbH from its founding shareholder Vural Öger for approximately €30 million.