BoE Split Widens; Centrica Inks

Arthi Gupta
23 Feb, 2011
New York City

The UK indexes plunged after escalating turmoil in Libya weighed on investor sentiment. The Bank of England policy members were split on key rate hike and UK mortgage approvals rose in January. Irish trade surplus dropped in December. Centrica signed

[R]4:00 PM London – The UK indexes plunged after escalating turmoil in Libya weighed on investor sentiment. The Bank of England policy members were split on key rate hike and UK mortgage approvals rose in January. Irish trade surplus dropped in December. Centrica signed £2 billion gas deal with Qatar.[/R]

World markets traded lower on worries of the volatile situation in Libya. In a televised speech last night, Colonel Muammar Gaddafi threatened to track down and kill protesters.

Latest reports suggest that Libya''s Interior Minister joined the anti-government protesters after quitting his Cabinet post. Abdul Fattah Younis al Abidi told media on Wednesday that the massacre of 300 unarmed civilians in the eastern city of Benghazi prompted his resignation.

In London, FTSE 100 Index declined 70.24 or 1.16% to 5,924.36 and the pound edged higher to close at $1.6241.

The BoE Split Widens

The minutes of the meeting of the Monetary Policy Committee of the Bank of England held on February 9 and 10 showed that six members including Governor Mervyn King preferred to hold the key interest rate at 0.5%. While Sentance preferred to increase the bank rate by 50 basis points, Dale and Weale voted for a quarter-point hike.

Regarding the bond purchase program, eight members of the committee voted to maintain the £200 billion bond purchase program. Adam Posen preferred a £50 billion increase in the program.

UK Mortgage Approvals Rise

Mortgage approvals for home purchase in the UK rose to 28,932 in January from 28,907 in December, the British Bankers'' Association said today. The value of mortgages approved remained unchanged at £4.1 billion, BBA said.

The number of re-mortgage approvals increased to 26,109 in January from 24,946 in December, while their value was stable at £3.3 billion.

NHS Job Cuts

More than 50,000 National Health Service jobs will be lost in the UK over the next four years, due to spending cuts of the Cameron government, campaign group the False Economy, which is backed by the Trades Union Congress said in a report on Wednesday.

The anti-cuts campaign group said a host of NHS trusts are expected to announce staff cuts over the coming four months, including all Wales'' health boards.

Irish Trade Surplus Falls

Ireland''s trade surplus narrowed in December after three consecutive months of improvement, data from the Central Statistics Office showed on Wednesday.

The seasonally adjusted trade surplus declined 10% to €3.74 billion in December from €4.1 billion in November.

Centrica Inks Deal with Qatar

Centrica plc, the parent company of British Gas, today announced it entered into an agreement for a unique three year contract with Qatargas to deliver 2.4 million tons per annum of liquefied natural gas to the UK Isle of Grain facility.

The deal will provide enough gas to meet approximately 10% of UK annual residential gas demand, enough to meet the needs of around 2.5 million households.

With increasing global competition from emerging economies for LNG, and declining North Sea production, this transaction secures important gas supplies for Centrica and the UK for the next three years.

Lehman Claims Dismissed against Barclays

A New York judge dismissed an attempt to sue Barclays for $11 billion or £6.8 billion over the way it bought Lehman Brothers. Lawyers accused the British bank of taking advantage of the chaos sparked by the financial crisis to snap up the American firm’s U.S. operations on the cheap.

Judge James Peck called the sale process during September 2008 ""imperfect, but still adequate under the exceptional circumstances.”

Rio Tinto Receives Binding Offer from Imerys

Rio Tinto PLC said it received a binding offer from Imerys to buy its talc business for an enterprise value of $340 million.

Gainers & Losers

Capital Shopping Centres Group Plc fell 0.94% to 380.80 pence after the retail property owner reported fiscal year 2010 revenue increased 3.8% to £420.3 million from £405.0 million in the previous year. Profit for the year was £511.8 million or 80.5 pence per share compared to a loss of £338.8 pounds or 66.1 pence per share in 2009.

Gartmore Group Limited increased 3.11% to 106.20 pence after the fund manager stated fiscal year 2010 net revenue decreased 7.5% to £208.7 million from £223.7 million in the comparable period. Profit for the period plunged 72% to £13.3 million or 4.2 pence per share versus £47.6 million or 25.6 pence per share in the previous year.

Logica Plc plunged 4.27% to 139.10 pence after the IT and business services provider reported fiscal year 2010 revenue was nearly flat with last year at £3.7 billion. Profit for the full year surged 279% to £152.1 million or 9.4 pence per share from £40.1 million or 2.5 pence per share last year, helped by improved performance in France as well as Northern and Central Europe.

Travis Perkins PLC gained 0.38% to 1,043.00 pence after the building materials and home improvement retailer reported full-year revenue grew 7.5% to £3.15 billion from £2.93 billion in the prior year. Profit for the year declined 10.2% to £141.3 million or 67.2 pence per share as against £157.4 million or 86.2 pence per share last year.

WSP Group plc rose 1.47% to 345.00 pence after the global design, engineering and management consultancy said that soon to be appointed chairman Tony Thorne decided to resign from the Board due to personal reasons.