UK Manufacturing Activity Grows; Home Prices Fall

Arthi Gupta
01 Nov, 2010
New York City

The UK indexes advanced after manufacturing activity growth accelerated unexpectedly and home prices fell in October. Irish private sector credit growth slackened in September. BG Group sanctioned Queensland Curtis LNG project.

[R]4:00 PM London – The UK indexes advanced after manufacturing activity growth accelerated unexpectedly and home prices fell in October. Irish private sector credit growth slackened in September. BG Group sanctioned Queensland Curtis LNG project.[/R]

UK stocks traded higher led by a rally in resource companies after China and UK reported faster manufacturing expansion. UK home prices struggled as new supply exceed demand.

In London, FTSE 100 Index traded higher 35.51 or 0.63% to 5,711.20 and the pound edged higher to close at $1.6065.

The UK home prices decreased for the fourth straight month in October, due to a fall in demand coupled with an increased property supply, according to data released from property Web site Hometrack today.

The average selling price for a home in the United Kingdom declined 0.9% on a monthly basis in October, following a 0.4% fall in September. This represents the fourth straight month of decline and the sharpest drop in 21 months. From October 2009, home prices edged down 0.1% to £156,200.

On an annual basis, home prices eased 0.1% in October for the first decline since January after adding 1.0% in September.

According to data from Markit Economics released today, the UK manufacturing activity growth accelerated unexpectedly in October, boosted by strong expansion of production underpinned by new orders and export growth.

The Markit/CIPS manufacturing Purchasing Managers'' Index rose to 54.9 in October from 53.5 in September. The survey found that UK manufacturers continued to raise their input buying volumes.

The amount of loans advanced to Irish private sector grew 1% annually in September, as against the 1.2% increase in August, the central bank said on Friday.

Credit extended to households fell 4.5% annually, compared to the revised 4.2% decline in August. Lending to the non-financial corporate sector declined 3% in the year ending September, following an annual decline of 2.2% in August, the bank noted.

British Prime Minister David Cameron held talks with visiting German Chancellor Angela Merkel in London on Sunday, with their discussions revolving mainly around issues relating to security and trade in Europe.

According to a spokeswoman, both leaders agreed that the 2011 EU budget should increase by no more than 2.9%, and the EU budget in future years ""should reflect the spending cuts that national governments were having to make.""

BG Group plc, the energy firm announced on Sunday that it will begin immediately the development and construction of the $15 billion Queensland Curtis Liquefied Natural Gas project or QCLNG, near Gladstone in Australia''s Queensland state. The company''s single biggest investment will see the development of the world''s first LNG plant fed by coal seam gas.

THE QCLNG project involves expanding exploration and development in southern and central Queensland and transporting gas through a 540 km underground pipeline network to Curtis Island near Gladstone where it will be liquefied.

The project that is designed to cash in on demand from Asia will be operated by BG Group''s Australian subsidiary QGC Pty Ltd.

iomart Group plc acquired the entire issued share capital of Titan Internet Ltd. for a total cash consideration of up to £4.2 million. Of the total consideration of £4.2 million, £3.6 million has been paid on completion and a further amount of up to £0.6 million is payable no earlier than April 1, 2011.

The company noted that the acquisition is in line with iomart''s strategy of becoming the UK''s foremost hosting company, focused on the delivery of high end managed hosting environments and solutions.

ANS Group Plc said it acquired the entire issued share capital of Alpha Business Computers Ltd. for a consideration of about £4.85 million. ANS Group noted that an amount of £2.3 million were paid in cash on completion. Around £1 million of the above amount was met from cash currently held by Alpha, with the balance being satisfied from ANS Group''s existing resources.

Chrysalis plc''s board noted the recent press speculation regarding the possibility of an offer made for the company and confirmed that it is in early stage discussions with a number of parties. The company has 67.14 million shares outstanding and issued at 2 pence a share.

Intertek Group plc, the quality and safety testing services provider said it acquired both project management and advisory firm Metoc plc and consultancy and advisory services provider Profitech.

Gainers & Losers

Mondi plc gained 0.67% to 523.50 pence after the paper and packaging company, in its interim management statement, said turnover for the third quarter was marginally higher than that of the second quarter, with continuing growth in selling prices.

Hammerson plc fell 0.31% to 417.80 pence after the real estate investment trust completed the disposal of a 51% interest in O''Parinor, Aulnay-sous-Bois, near Paris. Hammerson received proceeds of €217 million.

Ryanair Holdings PLC plunged 3.60% to $31.45 after the discount airline reported second quarter total operating revenues rose 29% to €1.28 billion from €992.1 million in the same period last year. Net profit in the quarter rose 32% to €330.3 million or 21.96 cents per share, compared with net profit of €250.5 million or 16.90 cents per share last year.

SSL International plc climbed 0.09% to 1,161.00 pence after the manufacturer of healthcare products announced changes to the composition of its board as a result of the successful recommended cash offer by Reckitt Benckiser Plc.

Telecity Group plc dropped 0.92% to 493.30 pence after the provider of network-independent data centers confirmed its positive outlook for the full-year 2010, saying the group''s performance “will be in line with market expectations.” Telecity also stated that it plans to increase its capacity across Europe.

Tikit Group plc fell 0.43% to 195.65 pence after the provider of integrated software solutions said it has made two strategic acquisitions that will together add significant strength to its client offering.

Tikit acquired from Sage Software Inc. the intellectual property and customer contracts for Carpe Diem.

TT Electronics plc advanced 0.31% to 160.25 pence after the technology-based group reported the sale of its WT Henley business, a designer and manufacturer of products for the transmission and distribution of low and medium voltage electricity, to Sicame SA.

The company noted that the total consideration for the sale is £11.9 million in cash of which £11.5 million is attributable to the sale of the UK business and the remaining £0.4 million is attributable to the sale of the business in China.

Weir Group Plc dropped 1.80% to 1,530.00 pence after the maker of pumps for the mining industry said third quarter revenues for each division increased from last year on strong orders.

Orders in constant currency terms for the 39 weeks ended October 1 climbed 32% from last year, with 44% rise in original equipment orders and 23% growth in aftermarket orders. In the 26-week first half, ended July 2, order input growth was 24%, with original equipment order growth of 28% and aftermarket order increase of 22%.

Xchanging plc increased 1.85% to 1,530.00 pence after the business processor said its revenues and profits for the full-year 2010 are in line with current market expectations.