UK Indexes Rise; BP Surges

Arthi Gupta
16 Jul, 2010
New York City

The UK indexes trade higher after BP successfully halted flow of oil into the Gulf of Mexico. BP begins well integrity test on the MC252 well. The UK first quarter construction output drops. Ireland Central Bank Governor stresses capital requirement needs will be met by banks.

[R]4:00 PM London – The UK indexes trade higher after BP successfully halted flow of oil into the Gulf of Mexico. BP begins well integrity test on the MC252 well. The UK first quarter construction output drops. Ireland Central Bank Governor stresses capital requirement needs will be met by banks.[/R]

In London FTSE 100 Index traded lower 46.04 or 0.88% to 5, 167.81 and the pound edged lower to close at $1.5359.

The UK construction output dropped 1.1% sequentially in the first quarter, according to data released by the Office for National Statistics today. That was a revision from the 1.6% drop reported in first quarter GDP data released on July 12.

The total volume of construction output in the first quarter of 2010 fell by 1.9% compared to the prior-year quarter.

The ONS stated new private housing work in the first quarter of 2010 was flat compared with the previous quarter and 8% lower compared with the same quarter in 2009.

The total volume of construction new orders in the first quarter rose by 1% compared with the fourth quarter of 2009 and grew 29% compared with the same period in 2009.

BP plc said the well integrity test on the MC252 well started last night will last at least 6 hours and could last up to 48 hours. During the test, the three ram capping stack is closed, effectively shutting in the well and all sub-sea containment systems have been temporarily stopped. Although it cannot be assured, it is expected that no oil will be released to the ocean during the test. Even if no oil is released during the test, this will not be an indication that oil and gas flow from the wellbore has been permanently stopped.

During the well integrity test, operations on the first relief well have been temporarily stopped while the well was at 17,840 ft as a precaution. Operations on the second relief well have been temporarily suspended at 15,874 feet to ensure that there is no interference with the first relief well. The relief wells remain the sole means to permanently seal and isolate the well.

Patrick Honohan, Ireland's central bank governor said today that domestic banks will meet the required capital levels to overcome future stress scenarios.

In his opening statement at the launch of 2009 annual report, Honohan said the severity of the tests conducted earlier by the Central Bank and Financial Services Authority of Ireland on loan losses exceeds that of the Committee of European Banking Supervisors version. He added that Ireland will be publishing details of the latest stress tests on July 23. Major Irish banks have already tested in March this year.

""""The new requirements we are imposing, along with some other measures, including the recent extension of the guarantee on banks' liabilities, place our banks in a stronger position to start lending again and to support economic recovery,"""" Honohan said.

The Basel Committee on Banking Supervision reviewed the design and overall calibration of the capital and liquidity frameworks at its July 14-15 meeting.

Based on this review, the Committee has developed concrete recommendations for completing its package of regulatory reforms. The Committee will present to the Central Bank Governors and Heads of Supervision concrete recommendations for the definition of capital, the treatment of counterparty credit risk, the leverage ratio, the conservation buffer and the liquidity ratios.

The Committee issued for consultation a “countercyclical capital buffer proposal.”