UK Indexes Surge; TUI Travel Loss Widens

Arthi Gupta
02 Dec, 2010
New York City

The UK indexes rose after construction activity slowed in November. GlaxoSmithKline inched closer to acquire China-based Nanjing MeiRui Pharma. TUI Travel annual loss widened 65% as sales declined 3.2%.

[R]4:00 PM London – The UK indexes rose after construction activity slowed in November. GlaxoSmithKline inched closer to acquire China-based Nanjing MeiRui Pharma. TUI Travel annual loss widened 65% as sales declined 3.2%.[/R]

UK stocks climbed higher after European markets traded up and commodities prices gained. The ECB left its key lending rate on hold and Spain completed the sale of 3-year bonds.

The European Central Bank said it will continue to conduct its main refinancing operations ""for as long as necessary"" and at least until April of next year. The central bank also retained its key interest rate at a record low of 1% for the nineteenth straight month, Jean-Claude Trichet announced it will continue its exceptional liquidity measures to support commercial banks, but did not mention any plans to expand the size of the program.

Spain sold 3-year bonds €2.5 billion today in the first bond auction held by the country since the Ireland received a €85-billion bailout. However, the yield on the bonds jumped to over 3.7% compared to a previous three-year bond yield of 2.5%.

In London, FTSE 100 Index surged 94.21 or 1.68% to 5,737.31 and the pound edged lower to close at $1.5567.

The Bank of England Governor Mervyn King is under tremendous pressure to resign on allegations of political bias.

A U.S. diplomatic cable dated February 2010 posted on WikiLeaks alleged King privately criticized Tory Prime Minister David Cameron and Chancellor George Osborne over their lack of experience and depth and their tendency to think of issues only in terms of their electoral impact.

The UK government''s public spending cuts are unlikely to derail the recovery, the Bank of England chief economist Spencer Dale said in a speech. He noted the substantial stimulus from monetary policy and weaker pound will help the economic recovery to continue.

Construction Sector Activity Slows

UK construction activity slowed in November. The seasonally adjusted construction Purchasing Managers'' Index rose to 51.8 in November from 51.6 in October, according to survey data released by Markit Economics, the Chartered Institute of Purchasing & Supply.

GlaxoSmithKline Nears Deal to Buy Nanjing MeiRui Pharma

GlaxoSmithKline plc, the drug maker is nearing a deal to buy Chinese drug maker Nanjing MeiRui Pharma Co. Ltd., according to media reports. The deal, which is likely to be valued in the low hundreds of millions of dollars, would enable the company to boost its presence in the fast-growing Chinese market.

Qantas Files Lawsuit against Rolls-Royce

Qantas initiated legal action against jet engine manufacturer Rolls-Royce seeking compensation for losses it had incurred after an engine failure on one of its Airbus A380 planes.

Gainers & Losers

Character Group plc gained 1.73% to 176.00 pence after the maker of toys, games and gifts reported fiscal year 2010 group sales edged higher 24.2% to £85.23 million from 2009 sales of £68.62 million. Profit for the year was £6.19 million or 18.94 pence per share versus a £1.64 million or 4.09 pence per share loss last year.

Consort Medical plc increased 1.27% to 477.75 pence after the medical devices supplier reported first-half total revenue increased 13% to £69.58 million from £61.54 million last year. Profit for the period grew 54% to £5.70 million or 19.3 pence per share from £3.70 million or 12.6 pence per share last year.

OMG plc surged 11.51% to 38.75 pence after image understanding solutions developer reported fiscal year 2010 revenues rose 19% to £31.2 million from £26.2 million a year ago. Pre-tax profit for the fiscal year 2010 gained 56% to £0.954 million, from £0.610 million last year.

Oxford Advanced Surfaces Group plc slumped 3.00% to 24.25 pence after the advanced materials company said it has “made excellent progress” in the year to date achieving independent technical validation of its key products. Further, the directors believe that 2011 will be a year of “further progress for the business.”

Redhall Group plc rose 1.87% to 136.50 pence after the engineering support services provider reported fiscal year 2010 revenue increased 12.2% to £144.72 million from £128.96 million last year. Profit for the period declined 13% to £3.56 million or 11.94 pence per share from £4.1 million or 14.07 pence per share last year.

TUI Travel Plc surged 6.39% to 228.10 pence after the travel operator reported fiscal year 2010 revenue declined 3.2% to £13.40 billion from £13.85 billion a year earlier. Loss for the year widened 65% to £86 million or 7.8 pence per share versus £52 million or 4.8 pence per share in the prior year.