UK Indexes Slide; Services Industry Index Expansion Slows

Arthi Gupta
03 Dec, 2010
New York City

The UK indexes slid after services industry index slackened and foreign currency reserves fell in November. Premier Foods confirmed talks to sell its

[R]4:00 PM London – The UK indexes slid after services industry index slackened and foreign currency reserves fell in November. Premier Foods confirmed talks to sell its “meet-free” business. Irish Continental agreed to sell Ferry Bilbao for €37.7 million.[/R]

UK indexes traded sideways tracking the sentiment in the region and eased after the release of weaker than expected employment report in the U.S.

The European Commission confirmed that its officials carried out unpredicted inspections at the premises of a limited number of companies active in the pharmaceutical sector in several member states. The Commission noted that it has reason to believe that these companies have “acted individually or as a cartel” to delay generic entry for a particular medicine.

In London, FTSE 100 Index fell 3.96 or 0.09% to 5,762.75 and the pound edged higher to close at $1.5608. The benchmark index increased 1.7% in the week.

Employers in the U.S. added 39,000 net news jobs in November, lower than expected increase of at least 150,000. The smaller than anticipated increased dragged the market sentient a day after when private employers were estimated to expand payrolls and retail stores reported rising sales in November.

Services PMI Eases

British service sector expanded at a slower pace in November, reflecting market uncertainties, according to survey data from Markit Economics.

The Chartered Institute of Purchasing & Supply business activity index for the services sector decreased to 53 in November from 53.2 in October.

Markit said incoming new business rose in November, with growth improving to the strongest since June as a number of companies were able to successfully convert enquiries into hard contract wins.

Foreign Currency Reserves Fall

The UK government''s net holdings of international reserves fell $728 million in November to $37.4 billion, the Treasury said.

The country''s gross foreign currency reserves decreased $1 billion in November to $76 billion. The Bank of England''s net holdings of foreign currency and gold fell $16 million in November.

Irish Service Sector Grows Marginally

Irish service sector growth remained broadly stable in November, according to a survey by Markit Economics.

The seasonally adjusted NCB services purchasing managers'' index was at 50.8 in November compared to 50.9 in October.

RBS Unit Sells Stake

The Royal Bank of Scotland N.V., a subsidiary undertaking of The Royal Bank of Scotland Group PLC said that it agreed to sell its 82.35% holding in RBS NB Uzbekistan CJSC to Korea Development Bank.

Premier Foods Confirms Talks

Premier Foods plc confirmed that it is in advanced talks with two parties regarding the sale of its meat-free business. The company decided to sell its meat-free business, including Quorn to cut its net debt.

The company that mainly sells its products under Mr Kipling, Branston and Hovis brands, admitted that it received bids from a number of parties, including multinational food groups and private equity firms.

Irish Continental Sells Ferry Bilbao

Irish Continental Group plc agreed to sell ferry Bilbao to St. Peter Line, Nicosia, Cyprus for a total consideration of €37.7 million, payable in installments over 5.75 years till September 2016. Delivery is expected to take place in December 2010.

The transaction is expected to result in a pre-tax profit of about €8.0 million in the year ended December 31, 2010.

Gainers & Losers

African Copper Plc gained 1.75% to 4.07 pence after the base metal holding company stated revenue for the sixth month period ended September 30 totaled $8.06 million. Pre-tax loss in the period was $6.11 million versus a profit of $43.29 million in the prior year.

Berkeley Group Holdings Plc surged 4.17% to 875 pence after the residential property developer reported first-half revenue rose 16% to £336.15 million from last year''s £290.14 million. Profits in the period rose 20.3% to £44.49 million or 32.8 pence per share from £36.97 million or 26.7 pence per share a year ago.

Falkland Islands Holdings plc climbed 0.52% to 387.00 pence after the holding company reported first-half turnover grew 4% to £14.35 million from £13.82 million a year ago. Profit in the period declined 28% to £632,000 or 6.7 pence per share, from £883,000 or 9.7 pence per share last year.

Hochschild Mining Plc edged higher 0.50% to 598.00 pence after the company engaged in mining, processing and sale of silver and gold said it inked deal to dispose of its remaining 6% stake in Lake Shore Gold Corp. at a net price of C$3.70 per common share.

James Halstead plc soared 4.17% to 750.00 pence after the floor coverings company said in its annual general meeting statement that worldwide sales increased 12% from a year ago and in the UK rose 5%. The company also noted that sales in Europe and Australia “continue to do well.”

Rio Tinto Plc rose 0.37% to 4,431.50 pence after the Anglo-Australian miner said the company and Sinosteel Corp. extended their Channar Mining joint venture in the Pilbara region of Western Australia and mine 50 million tons of iron ore.

Skyepharma PLC plunged 5.04% to 33.00 pence after the drug delivery company stated revenues for 2011 will decrease compared with 2010 levels because of one-time revenues of 2010 are not expected to recur in 2011. The 2011 results are likely to be impacted by the costs of preparing the Flutiform supply chain for launch.