UK Indexes Drop; Smith & Nephew Rebuffs J&J

Arthi Gupta
10 Jan, 2011
New York City

The UK indexes slid after home prices slumped and financial services activity improved. The UK PM Cameron expressed concern over inflation. Smith & Nephew rebuffed J&J''s

[R]3:30 PM London – The UK indexes slid after home prices slumped and financial services activity improved. The UK PM Cameron expressed concern over inflation. Smith & Nephew rebuffed J&J''s £7 billion offer.[/R]

The UK indexes decline tracking losses in the region ahead of Portugal debt sale this week of 1.6 billion 10-year bond sales. BP Plc shut down production at its Trans-Alaska pipeline after a leak.

The UK Prime Minister David Cameron said on Sunday that he was concerned over rising inflation but backed the Bank of England to deal with rising prices.

""If you look at the recent [inflation] figures, they are concerning because they are well outside what the Bank of England is meant to deliver,"" Cameron told in an interview to the BBC.

The aid package extended to Ireland by the European Union and the International Monetary Fund buys time for the country to reduce its debt and tail risks, Ireland’s Central Bank Governor Patrick Honohan said.

In a speech on Friday, Honohan, said in his view, an ideal financial package for reducing tail risk would have offered insurance against the tail risk.

In London, FTSE 100 Index declined 25.26 or 0.42% to 5,959.00 and the pound edged lower to close at $1.5512.

UK Financial Services Activity Expands

The British financial services sector expanded in the three months to December for the second straight quarter according to a survey conducted by the Confederation of British Industry and PricewaterhouseCoopers.

Nearly 50% of survey respondents said that business volumes increased and 23% said they fell, financial services survey showed. The resulting balance of positive 27% was just below last quarter''s balance of plus 28%.

Profitability in the overall financial service sector grew at the slowest pace for 18 months.

Home Prices Slump

UK home prices declined in December for a second month, a report from Lloyds Banking Group Plc''s Halifax division showed on Monday.

The average home price in Britain fell 1.3% between November and December, resulting in a 1.6% decline for the full year, new data from the mortgage lender Halifax shows. The fall comes after a 0.2% decline in November. The average price of a home was £162,435 in December.

Smith & Nephew Rejects J&J Offer

Smith & Nephew Plc, the hip and knee replacements maker rejected a £7 billion takeover proposal from its U.S.-based Johnson & Johnson, Sky News reported on Saturday.

J&J valued Smith & Nephew at more than 750 pence per share. However, Smith & Nephew''s board rejected the bid on the basis that it substantially undervalued the company.

Gainers & Losers

Aer Lingus Group plc fell 0.67% to €1.4 after the Irish flag carrier said its December 2010 traffic declined 20.5% to 852 million revenue passenger kilometers from 1.07 billion RPKs a year ago.

The company said its booked load factor in December 2010 improved 2.7 points to 74.6% from 71.9% in December 2009.

AstraZeneca PLC dropped 0.15% to 2,984.50 pence after the biopharmaceutical company said that the U.S. Food and Drug Administration extended the time by three months to complete its review of the New Drug Application for the company''s investigational thyroid cancer drug vandetanib.

BP Plc dropped 0.32% to $46.08 pence fell after the oil giant shut down a major oil pipeline in Alaska due to a leak. The pipeline is responsible for about 12% of the U.S.’s total crude oil output.

Michael Page International plc decreased 1.57% to 531.50 pence after the recruitment consultancy reported fourth quarter gross profit for the quarter rose 32.2% to £119.8 million from £90.6 million in the prior-year period. For the full year, the group''s gross profit rose 25.7% to £ 442.1 million.

Persimmon plc edged lower 0.05% to 437.50 pence after the homebuilder stated that during 2010, the company legally completed 9,384 homes compared with 8,976 homes a year ago at an average selling price of about £167,000. This generated a full-year turnover of about £1.57 billion, a 10% rise from the previous year.

Walker Greenbank PLC surged 7.92% to 54.50 pence after the interior furnishings group said that its contracts division won a £280,000 order to supply fabric for a new hotel in Dubai.

William Morrison Supermarkets Plc gained 0.81% to 272.20 pence after the food and grocery retailer estimated preliminary total sales excluding fuel rose 3.1% in the six weeks ended January 2 and rose 4.7% including fuel. Comparable sales rose 1% and increased 4% including fuel.