UK Indexes Dip; Taylor Wimpey Soars

Arthi Gupta
03 Aug, 2010
New York City

The UK indexes declined tracking lower commodity prices. The UK construction sector activity eased in July. Cameron and Clegg pledge for working towards economic recovery in the UK. BP Plc agrees to sell Colombian business to Ecopetrol and Talisman.

[R]4:30 PM London – The UK indexes declined tracking lower commodity prices. The UK construction sector activity eased in July. Cameron and Clegg pledge for working towards economic recovery in the UK. BP Plc agrees to sell Colombian business to Ecopetrol and Talisman.[/R]

BP Plc said that the ""static kill"" to permanently plug the damaged deepwater well in the Gulf of Mexico may take place on Tuesday

In London, FTSE 100 Index traded lower 33.31 or 0.62% to 5,362.50 and the pound edged higher to close at $1.5924.

The British construction sector fell in July, suggesting the rate of expansion in the sector may have already peaked. However, growth remained solid supported by a further increase in new work.

The Markit/Chartered Institute of Purchasing & Supply construction purchasing managers'' index slid to 54.1 in July from 58.4 in June. Input prices faced by constructors increased substantially during the month, driven by higher raw material prices.

The UK Prime Minister David Cameron and Deputy Prime Minister Nick Clegg in a joint letter to the Cabinet ministers said deficit reduction and continuing to ensure economic recovery is the most urgent issue facing Britain.

They wrote there will be two major shifts, the first is a redistribution of power to communities and people, to reverse decades of over-centralization and the second is that the government will govern for the long term.

BP plc said on Monday that the ""static kill"" to permanently plug the damaged deepwater well in the Gulf of Mexico may take place on Tuesday. The company said that during final preparations to commence with the injectivity test, a small hydraulic leak was discovered in the capping stack hydraulic control system. The injectivity test will be rescheduled until the leak is repaired.

The injectivity test is the initial phase of the static kill operation. It consists of a test to push crude down the well and into the reservoir by injecting refined oil. The static kill operation involves pumping large quantities of heavy drilling fluid down into the well.

The company further announced to sell its oil and gas exploration, production and transportation business in Colombia to a consortium of Ecopetrol, Colombia''s national oil company, and Talisman of Canada. Ecopetrol will own 51% of the acquired company and Talisman 49%.

The two companies will pay BP a total of $1.9 billion in cash, subject to customary post-completion price adjustments, for 100% of the shares in BP Exploration Company (Colombia) Limited, the wholly-owned BP subsidiary company that holds BP''s oil and gas exploration, production and transportation interests in Colombia.

The sale is expected to be completed by the end of the year. As per the terms of the deal, Ecopetrol and Talisman are due to pay BP a cash deposit of $1.25 billion with the balance of payment due on completion of the sale.

Gainers & Losers

Drax Group plc declined 0.44% to 385.00 pence after the power generation company reported a higher profit for the first half of fiscal 2010, helped by higher revenues on increased electrical output, despite challenging commodity market conditions. Total revenue for the six months increased to £780.6 million from £706.9 million in the previous year. Profit before tax for the period rose to £132.2 million from £33.8 million in the prior year.

Investec plc fell 6.16% to 472.50 pence after the investment banking company raised $166.4 million by placing 22 million ordinary shares. The shares were issued at 475 pence each, giving a 5.75% discount to Monday''s closing price of 504 pence.

Rotork plc edged lower 2.35% to 1,499.00 pence after the engineering firm reported an increase in pre-tax profit for the first half, primarily reflecting sales growth. For the half year, profit before tax rose 6.8% to £47.47 million from £44.44 million last year. Revenue for the six months surged 130.8% to £183.5 million from £79.5 million a year ago. The board increased its interim dividend by 14.3% to 12.75 pence per share from 11.15 pence last year.

Taylor Wimpey plc surged 8.70% to 31.00 pence after the home builder reported a pre-tax profit of £19.6 million in the six months to June against a loss of £673 million last time. Half-yearly earnings per share were 0.2 pence in comparison with a 43.6 pence loss in the previous year. Revenue for the period ended July 4 edged higher 8.0% to £1.22 billion from £1.13 billion in the comparable period last year.

The Weir Group PLC decreased 0.49% to 1,220.00 pence after the maker of pumps for the mining industry reported a higher profit for the first half of fiscal 2010, helped by higher order input reflecting strong demand for commodities.

For the 26 weeks ended on July 2, profit attributable to equity holders of the company was £96.1 million or 45.2 pence per share, compared with £59.8 million or 28.1 pence per share last year. Revenues for the 26-week period rose 9% to £775.1 million from £709.8 million in the prior-year period, helped by strong aftermarket revenues, which represented 58% of the total revenues.