FTSE Declines 1.1%; Vedanta Raises $6 B

Arthi Gupta
19 Nov, 2010
New York City

The UK indexes fell after China inflation worries dragged commodities lower and Ireland moved closer to accept a bailout package. The UK construction sentiment declined in the third quarter. Vedanta raised $6 billion for Cairn India deal. Accenture agreed to buy Germany''s CAS Computer.

[R]3:45 PM London – The UK indexes fell after China inflation worries dragged commodities lower and Ireland moved closer to accept a bailout package. The UK construction sentiment declined in the third quarter. Vedanta raised $6 billion for Cairn India deal. Accenture agreed to buy Germany''s CAS Computer.[/R]

Irish trade surplus widened in September. BTG agreed to buy Biocompatibles for £177.2 million.

In London, FTSE 100 Index fell 61.55 or 1.07% to 5,707.09 and the pound edged lower to close at $1.5949. For the week, the FTSE 100 index decreased 1.54%.

Ireland Closer To Accepting Bailout

The Republic of Ireland is edging closer to accepting a multi-billion-euro cash injection into its loss making banking sector. Brian Lenihan, the nation''s finance minister admitted that Dublin will have to accept external aid.

He told Parliament on Thursday that it would be a ""very desirable outcome"" if a contingency fund is set up by the European Union, the International Monetary Fund and the European Central Bank.

Budget cutbacks totaling at least €15 billion over the next four years are expected to be imposed on Dublin by the EU and the IMF in return for financial support. The government is already poised to unveil €6 billion worth of cuts in its 2011 Budget.

China Hikes Reserve Requirement

China''s central bank on Friday raised commercial banks'' reserve requirement ratio by 50 points for the second time this month. The fifth raise in the ratio this year will be effective from November 29.

The People''s Bank of China''s latest move came as inflation soared to a 25-month high of 4.4% in October from 3.6% in September, much higher than the official target of 3%.

The measure is intended to curb surging property prices and rising inflation.

Adam Posen on Asset Price Booms

The Bank of England policy maker Adam Posen said on Thursday that monetary policy is not the primary driver of sustained asset price boom.

""Monetary ease has some positive correlation with asset prices, a relationship most clearly seen between broad money and real estate prices, but is not the primary driver of sustained asset price booms,"" said Posen.

UK Construction Sentiment Negative

Sentiment in the British construction industry turned increasingly negative in the third quarter due to the government''s spending cuts and continued concerns over access to finance.

According to latest construction market survey by the Royal Institution of Chartered Surveyors, the balance of surveyors reporting a decrease in workloads jumped those saying an increase by 10 percentage points in the third quarter. In the second quarter, the increase was 7 percentage points.

Insufficient funding for new developments and continued concerns over the economy were among the factors cited as affecting construction projects, RICS said.

Irish Trade Surplus Widens

Irish trade surplus widened in September from August as monthly exports increased. The trade surplus totaled €3.91 billion in September, widening from €3.80 billion surplus in August, the Central Statistics Office said on Friday. In July, the trade surplus was €4.19 billion.

Exports value increased 4% annually to €7.79 billion in September, while the value of imports grew 7% to €3.89 billion. On a monthly basis, exports increased 2% on a seasonally adjusted basis, while imports increased 1% in September.

Vedanta Raises Funds for Cairn India Deal

Vedanta Resources plc, the India focused metals and mining firm reached deals with a consortium of banks for a financing of $6 billion to fund the company''s proposed acquisition of a stake in minerals and oils company Cairn India Ltd., a unit of Cairn Energy plc.

BTG Acquires Biocompatibles

BTG plc, the specialist pharmaceuticals signed a deal to buy medical technology company Biocompatibles to create an international specialist healthcare business. Biocompatibles shareholders will get 1.6733 new BTG shares and 10 pence in cash for each Biocompatibles share held. Based on BTG''s closing price 251 pence per share on November 18, the deal values each Biocompatibles share at 430 pence or a total consideration of £177.2 million.

Balfour Beatty Buys Rok Housing and Construction Units

Balfour Beatty PLC said that it acquired certain segments of Rok''s business in affordable housing and general construction for a consideration of £7 million, of which £4 million was paid in cash. The balance of £3 million will be paid as contracts transfer. The acquisition is expected to add about £100 million per annum to the Group''s revenue.

Thomson Reuters Acquires Pangea3

Thomson Reuters Corp. acquired Pangea3, a legal process outsourcing provider serving corporate legal departments and law firms worldwide. Terms of the deal were not disclosed. According to Thomson Reuters, the acquisition extends its strategy to develop software and workflow solutions for legal professionals around the world.

Accenture to Buy CAS Computer

Accenture Plc agreed to acquire CAS Computer Anwendungs-und Systemberatung AG, a German provider of Customer Management and Mobility Solutions, for undisclosed terms.

Accenture anticipates the deal to enhance its ability to help consumer products companies improve their in-store strategies through more effective and efficient retail execution.

Gainers & Losers

FBD Holdings Plc soared 4.87% to €6.05 after the Ireland-based holding company said in its interim management statement covering the period from July 1, 2010 to date, that it expects full-year 2010 operating earnings per share to be in a range of 105 to 110 cent per share.

Fuller, Smith & Turner Plc dropped 0.24% to 611.00 pence after the pub owner reported first-half revenue grew 4% to £121.5 million from £116.9 million in the prior year. Profit before tax increased 11% to £16.8 million from the prior year''s £15.1 million.

Regus Plc fell 2.31% to 78.35 pence after the office hire firm said revenues for the four months to October 31, 2010 increased 1.4% to £336.5 million compared to £332 million achieved for the same period last year.

Rotork Plc dropped 0.24% to 1,656.00 pence after the actuator manufacturer in its interim management statement covering the period from July 1 to November 19 said order intake in the period remained strong, with the third quarter 28% higher than the prior year.

T. Clarke Plc decreased 1.24% to 119.50 pence after the building services firm said in its interim management statement for the period from July 1 to November 18, order book remains strong at about £180 million.