UK Indexes Decline; BAE Systems Swings to Profit

Arthi Gupta
17 Feb, 2011
New York City

UK indexes slid after weak economic data from the U.S. The UK government and the BoE formed committee to tighten banking regulation. The BoE policy maker Sentance warned of inflationary pressures. The UK manufacturers estimated output to grow. Rolls-Royce secured contracts valued at $246 million.

[R]3:30 PM London – UK indexes slid after weak economic data from the U.S. The UK government and the BoE formed committee to tighten banking regulation. The BoE policy maker Sentance warned of inflationary pressures. The UK manufacturers estimated output to grow. Rolls-Royce secured contracts valued at $246 million.[/R]

The Bank of England policy maker Andrew Sentance insisted that an immediate hike in interest rates is necessary to strengthen the value of the pound to curb inflation.

The policy hawk of the Monetary Policy committee said that the Bank of England''s monetary policy committee is underestimating global inflationary pressures and UK inflation is likely to be higher over the next two years than the central bank expected.

In London, FTSE 100 Index declined 14.38 or 0.24% to 6,070.97 and the pound edged higher to close at $1.6159.

UK Manufacturers Estimate Strong Output Growth

UK manufacturers expect output to grow strongly over months ahead, the latest Industrial Trends Survey from Confederation of British Industry showed on Thursday.

In February''s survey, 37% of respondents predict an increase in output, while 14% expect a fall, giving a balance of plus 23%. The last month''s balance was plus 17%.

UK Forms Interim Financial Policy Committee

The Bank of England and the UK government on Thursday announced the formation of an interim Financial Policy Committee aimed at better regulation of British banking system.

The BoE Governor Mervyn King, who will chair the FPC, welcomed the new initiative. He said, ""The interim FPC will have important work to do as part of the new proposed regulatory framework.""

Rolls-Royce Secures Contracts

Rolls-Royce said it secured two major support contracts, worth a total of $246 million, to cover engines powering C-130 military transport aircraft in operation with the U.S. and UK militaries.

Under a $203 million MissionCare contract modification, Rolls-Royce is expected to provide the U.S. Air Force with propulsion system services for its fleet of C-130J aircraft.

Further, Rolls-Royce said it signed a one-year contract extension, valued at over $43 million, for the support of the UK''s C-130 military transport fleet.

Balfour Wins Contract

Balfour Beatty has been awarded a $350 million contract to build and refurbish four U.S. Air Force bases. The contract involves the development, management, construction and renovation of homes and other facilities and amenities at Beale, F.E. Warren, Malmstrom and Whiteman Air Force bases.

Gainers & Losers

BAE Systems plc plunged 4.72% to 338.90 pence after the defense and security firm reported fiscal year 2010 profit was £1.05 billion or 30.3 pence per share compared to a loss of £67 million or 1.9 pence per share last year.

Kingfisher Plc fell 0.51% to 256.00 pence after the home improvement retailer reported total sales for the 13 weeks ended January 29 dropped 0.1% to £2.31 billion mainly on poor performance in France along with weather disruption and a weak market in the UK & Ireland.

Ladbrokes plc slumped 4.01% to 136.30 pence after the company engaged in betting and gaming businesses stated fiscal year 2010 revenue declined 5.1% to £980.1 million from £1.03 billion in the prior year. Profit in the period surged 368% to £348.3 million or 38.4 pence per share from £74.4 million or 9.9 pence per share last year.

Reed Elsevier plc declined 2.96% to 557.00 pence after the publisher and information provider reported fiscal year 2010 revenue declined 0.3% to £6.055 billion from £6.071 billion a year ago. Net profit surged 64% to £642 million compared to £391 million a year earlier.

Safestore Holdings plc gained 2.33% to 143.00 pence after the self storage company reported first quarter revenue rose 7.6% to £23.1 million from £21.5 million last year.