UK Rates on Hold; DS Smith Up 7%

Arthi Gupta
09 Dec, 2010
New York City

The UK indexes climbed after the Bank of England retained quantitative easing program at

[R]4:00 PM London – The UK indexes climbed after the Bank of England retained quantitative easing program at £200 billion and key rate at 0.5%. Fitch lowered Irish credit ratings with stable outlook. The UK home prices declined in November and trade deficit widened in October and Irish inflation eased in the month.[/R]

The Bank of England maintained the size of the quantitative easing at £200 billion and left its key interest rate unchanged at 0.5%.

At the end of two-day rate setting meeting, the Monetary Policy Committee led by Governor Mervyn King decided to retain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion. The minutes of the meeting will be released on December 22.

Policy makers voted to hold the interest rate at 0.5%.

Fitch Ratings today downgraded Ireland''s credit ratings by three notches, citing additional fiscal costs of restructuring and supporting the banking system and weaker prospects and greater uncertainty regarding the economic outlook.

The rating agency cut Ireland''s long-term foreign and local currency issuer default ratings to ''BBB+'' from ''A+''. The outlooks on the long-term IDRs are stable.

In London, FTSE 100 Index gained 12.75 or 0.24% to 5,807.69 and the pound edged lower to close at $1.5795.

UK Home Prices Fall; Trade Deficit Widens

Home prices in the UK declined 0.1% on a monthly basis in November, taking the annual fall to 0.7%, a report from Lloyds Banking Group Plc''s Halifax division showed. The latest decline is significantly lower than the quarterly rate of decline of 5% to 6% during the second half of 2008.

The UK logged a trade deficit of £8.5 billion in October, from £8.4 billion recorded in September according to data published from the Office for National Statistics today.

Goods trade balance deficit with non-EU nations rose to £5 billion in October, from £4.5 billion in September. EU trade deficit narrowed to £3.5 billion in October from £3.8 billion in September.

Services trade surplus remained at £4.6 billion in October. Britain''s total trade deficit inched up to £3.9 billion in October from September''s £3.8 billion.

The UK leading economic indicator rose to 105.1 in October from 104.7 in September, the Conference Board said on Thursday.

Six of the seven components made positive contributions to the index in October.

Irish Inflation; Employment Eases

Irish consumer price index rose at an annual pace of 0.6% in November compared with a 0.7% increase in October, the Central Statistics Office said.

On a monthly basis, consumer prices dropped 0.1% in November after stagnating in October.

Irish employment declined at a slower pace in the third quarter compared to the second quarter, the Central Statistics Office said Thursday.

There were 1,851,500 persons in employment between July and September, down 3.7% or 70,900 persons annually. This compares with a 4.1% fall in the second quarter and an 8.8% drop in the third quarter of 2009.

On a seasonally adjusted basis, employment fell by 23,500 in the quarter, the statistics agency said.

Gainers & Losers

Ashtead Group plc surged 8.56% to 156.00 pence after the British industrial equipment rental company reported second quarter revenues grew 12.4% to £245.2 million from £218.2 million in the same quarter last year. Profit in the quarter surged 33% to £6.1 million or 1.2 pence per share from £4.6 million or 0.9 pence per share in the prior year.

BAE Systems Plc fell 0.95% to 322.00 pence after the defense products maker decided to cut more than 1,300 jobs in the UK. The company said it started consultation regarding potential job losses at six of its UK sites and two RAF bases due to the impact on the Harrier and Nimrod programs where BAE now received contract termination for customer convenience letters from the Ministry of Defence.

CareTech Holdings plc declined 1.79% to 357.00 pence after the specialist care and housing support services provider for people with learning and physical disabilities said fiscal year 2010 revenues climbed 8% to £89.7 million from last year''s £83.42 million. Profit for the period rose 36% to £6.52 million or 13.55 pence per share from £4.79 million or 10.67 pence per share last year.

DS Smith Plc soared 6.97% to 205.60 pence after the supplier and wholesaler of packaging and office products reported first-half revenues rose 15.3% to £1.17 billion, compared to prior year''s £1.02 billion. Profit for the period increased 18% to £27.5 million or 6.5 pence per share grew from last year''s £23.4 million or 5.9 pence per share.

Misys plc dropped 1.79% to 296.50 pence after the multinational software company estimates first-half revenues between £160 million and £162 million and adjusted operating profit from continuing operations of £20 million to £23 million.

Mulberry Group plc edged lower 0.80% to 863.00 pence after the luxury handbag maker stated first-half revenue grew 38% to £44.67 million from £32.32 million in the same period last year. Profit during the period surged 217% to £3.26 million or 5.6 pence per share, from £1.03 million or 1.8 pence per share reported in the prior year.