UK Inflation Rises; Ireland Debt Downgrade

Arthi Gupta
06 Oct, 2010
New York City

The UK indexes rose on hopes of global economic recovery. Fitch downgraded Irish debt ratings with negative outlook. Irish consumer confidence fell in September. The UK shop price inflation rose to 5-month high. GE 750 pence a share takeover bid rejected by Wellstream Holdings.

[R]6:00 PM London – The UK indexes rose on hopes of global economic recovery. Fitch downgraded Irish debt ratings with negative outlook. Irish consumer confidence fell in September. The UK shop price inflation rose to 5-month high. GE 750 pence a share takeover bid rejected by Wellstream Holdings.[/R]

International rating agency Fitch downgraded Ireland''s long-term foreign and local currency issuer default ratings, or IDRs to A+ from AA-. The outlooks on the long-term debts are negative.

""The downgrade of Ireland reflects the exceptional and greater-than-expected fiscal cost associated with the government''s recapitalization of the Irish banks, especially Anglo Irish Bank,"" said Chris Pryce, Director in Fitch''s Sovereign Group.

In another report, Moody''s Investors Service announced rating actions on several Irish banks and building societies. The rating agency placed on review for possible downgrade the ratings of all government-guaranteed long-term debt issued by Irish banks that are covered by the Eligible Liabilities Guarantee scheme.

In London, FTSE 100 Index traded higher 45.63 or 0.81% to 5,681.39 and the pound edged higher to close at $1.5902.

Irish consumer confidence index declined in September, according to a latest report from the KBC Bank Ireland and the Economic and Social Research Institute released today. The ESRI/KBC consumer sentiment index dropped to 52.4 in September from 61.4 in August.

The British Retail Consortium reported that shop price inflation in the United Kingdom increased marginally in September. The BRC''s shop price index rose to 1.9% in September from 1.7% in August.

The BRC said food price inflation increased to a 15-month high of 4.0% in September from 3.8% in August. Non-food inflation increased to 0.7% in September from 0.5% in August.

Growth of permanent staff placements in the UK rose at the weakest rate in September, according to a report from the Recruitment and Employment Confederation and KPMG.

The UK''s new car registrations decreased 8.9% in September, according to a report by the Society of Motor Manufacturers and Traders released today.

New car registrations totaled 335,246 units in September which was the second lowest for the month since 1999.

The National Association of Pension Funds said in a survey published today that employers should be “more clear” about the pension provisions while recruiting and job seekers need to be “aware” of their pension rights.

According to NAPF Chief Executive Joanne Segars, the UK faces a growing retirement saving crisis. She felt that a good pension is a vital part of any reward package.

General Electric Co. confirmed that it made 750 pence per share cash proposal to acquire the UK-based Wellstream Holdings plc, but the fluid transportation company rejected the bid.

GE said that it reserves the right to reduce the offer price if Wellstream declares any dividends to its shareholders in addition to the dividend of 4.0 pence payable on October 13.

Gainers & Losers

Greggs plc declined 1.83% to 466.30 pence after the bakery retailer reported a 2.1% rise in sales for the third quarter, including a like-for-like sales increase of 0.2%.

MediLink-Global UK Limited surged 6.67% to 8.00 pence after the electronic health card network service provider said it has conditionally raised £1.33 million, before expenses, through the placing of 13.27 million new ordinary shares of 5 pence each in the company at a price of 10 pence per share.

J Sainsbury plc dropped 0.64% to 387.10 pence after the retailer reported increases in sales and like-for-like sales for the second quarter, helped by new store openings and its non-food offers. The company said total sales for the second quarter including fuel improved 6.6%, compared to 7.6% growth in the first quarter, taking total sales growth in the first-half of the year to 7%.

Including fuel, like-for-like sales for the second quarter rose 4.3% compared with 4.6% growth in the first quarter. In the first six months, like-for-like sales growth was 4.4%.

Promethean Plc slumped 4.8% to 117.500 pence after the investment company announced that with effect from October 1, Michael Biddulph, a member of the executive team of the company''s Investment Manager, has ceased to be a member of Promethean Investments LLP.

Sportingbet Plc fell 0.19% to 79.05 pence after the online sports betting and gaming group reported a sharp decline in profit for the fiscal year 2010, reflecting charges related to agreed settlement payment to the United States Department of Justice.

Net revenue for the fiscal year 2010 grew 27% to £207.5 million from £163.6 million in fiscal 2009. Net profit in the period plunged 69% to £3.9 million or 0.7 pence per share, from £12.4 million or 2.4 pence per share in the prior year.

Thorntons PLC gained 2.22% to 92.00 pence after the chocolate and confectionery company reported first quarter total sales grew 7.4% to £50.3 million.