UK GDP Contracts; Public Sector Borrowing Increases

Arthi Gupta
25 Jan, 2011
New York City

The UK indexes declined after economy contracted unexpectedly in the fourth quarter due to cold weather conditions. The UK public sector borrowing increased in December. Irish producer prices increased in December. Rotala agreed to acquire Preston Bus for

[R]4:00 PM London – The UK indexes declined after economy contracted unexpectedly in the fourth quarter due to cold weather conditions. The UK public sector borrowing increased in December. Irish producer prices increased in December. Rotala agreed to acquire Preston Bus for £3.2 million.[/R]

In London, FTSE 100 Index declined 10.68 or 0.19% to 5,933.17 and the pound edged lower to close at $1.5788.

UK Economy Contracts

The UK economy contracted unexpectedly in the fourth quarter, figures from the Office for National Statistics showed on Tuesday.

Gross domestic product fell 0.5% sequentially in the fourth quarter of 2010 following a 0.7% expansion in the third quarter, preliminary estimates from the Office for National Statistics showed on Tuesday. The disruption was caused by bad weather in December, according to ONS data.

On a yearly basis, the economy expanded 1.7% in the fourth quarter as against the 2.7% expansion in the third quarter.

UK Public Sector Borrowing Increases

British public sector net borrowing rose from last year, while net cash requirement increased, according to latest data.

The public sector net cash requirement was £25.5 billion in December, £2.2 billion higher net cash requirement than in December 2009, the Office for National Statistics said Tuesday. It was also up from £17.4 billion in November.

Public sector net borrowing including financial interventions increased £1 billion annually to £15.3 billion in December, according to latest data from the Office for National Statistics released today. However, it was down from a revised £19.7 billion in November.

UK Service Sector Growth Static

The seasonally adjusted index of services for the UK was unchanged in November following a 0.6% fall in October, the Office for National Statistics said.

The reason was a 2.8% fall in hotels and restaurants sector being offset by increases in distribution and transport, storage and communication.

Irish Producer Prices Up

Factory gate prices in Irish manufacturing sector increased 1% annually in December after a flat reading in November, the Central Statistics Office said on Tuesday.

On a monthly basis, producer prices recorded no growth in December following a 1.6% rise in November.

For the whole year of 2010, factory prices increased 0.1% following a 0.2% fall in 2009.

Petmin Inks Deal With Hummingbird

Petmin Ltd. said it entered into a deal with Hummingbird and wholly owned subsidiary Iron Bird Resources Inc., relating to Hummingbird''s Mount Ginka license for exploration of iron ore in Liberia.

Petmin expects to provide up to a total sum of $2 million for the exploration of the Mount Ginka license area in a two stage plan to ascertain the commercial viability of the project.

Rotala Buys Preston Bus

Rotala PLC said that it acquired Preston Bus Ltd. for a consideration of £3.2 million from Stagecoach Group plc. The offer for PBL was made on a debt free basis.

The Board of Rotala estimates that the net book value of the assets being acquired is about £3 million, with the principal operating assets being comprised of a freehold property and the vehicle fleet.

Gainers & Losers

Autonomy Corporation plc climbed 0.81% to 1,490.00 pence after the company engaged in providing software development and distribution said that it entered into a seven-figure agreement with a UK government agency to license Autonomy''s Intelligent Data Operating Layer software for regulatory and compliance or Protect applications.

Gooch & Housego PLC gained 0.49% to 517.50 pence after the manufacturer of optical components and systems said that following receipt of regulatory approval announced earlier, it has closed the acquisition of EM4.

Misys Plc plunged 3.28% to 321.50 pence after the financial services software provider reported first-half revenues grew 2% to £160.9 million from £158.4 million in the same period last year. Profit for the period surged 2876% to £633.9 million or 117.1 pence per share from £21.3 million or 3.9 pence per share in the prior-year period.

Niche Group plc fell 2.29% to 6.40 pence after the company engaged in the investment in gas exploration, development and production companies, initially in Turkey said that gross new funds of £11 million are being raised at 6 pence per ordinary share of 1 pence each in the capital of Niche pursuant to a placing of 183,333,333 ordinary shares.

Playtech Ltd. fell 1.26% to 410.75 pence after the gaming software firm said that total revenues during the fourth quarter rose 21% to €36.9 million from €30.4 million in the year-ago period.

Total revenues for the year to December 31, 2010 increased 24% to €142.3 million from €114.8 million last year. Gross income for the year grew 26% to €173.1 million from €137.3 million prior year.

Playtech Ltd. also announced the acquisition of IGS, a developer of casino management systems for an initial £2.5 million cash consideration.