Osborne Forecasts Rise in Inflation, GDP; Ferrexpo Net Soars 99%

Arthi Gupta
23 Mar, 2011
New York City

The UK indexes edged higher as Portugal debated the austerity measures. UK forecasted inflation to reach as high as 5% and GDP to expand 1.7% in the current year. The UK mortgage approvals climbed in February. Ferrexpo 2010 net surged 99%.

[R]4:30 PM London – The UK indexes edged higher as Portugal debated the austerity measures. UK forecasted inflation to reach as high as 5% and GDP to expand 1.7% in the current year. The UK mortgage approvals climbed in February. Ferrexpo 2010 net surged 99%.[/R]

In London, FTSE 100 index gained 1.55 or 0.03% to 5,765.29 and the pound edged lower to close at $1.6259.

The BoE Members Divided on Retaining Key Rate

Policy makers of the Bank of England left the key interest rate unchanged and maintained the size of quantitative easing at £200 billion by a split vote in March, the minutes of the Monetary Policy Committee meeting showed today.

Six members of the MPC including Governor Mervyn King voted to maintain the interest rate at a historic low of 0.5%. Andrew Sentance preferred to increase bank rate by 50 basis points, while Spencer Dale and Martin Weale voted for a quarter point hike. The meeting was held on March 9 and 10.

Regarding the bond purchase program, eight members of the MPC voted to maintain the size of Quantitative Easing or what is generally know as money printing at £200 billion. Adam Posen voted against the proposition, preferring to increase the size of the asset purchase program by £50 billion to £250 billion.

Osborne Forecasts Rise in Inflation and GDP

British Chancellor of the Exchequer George Osborne said inflation is expected to be between 4% and 5% this year.

He said the British economy is forecast to grow 1.7% this year and 2.5% next year. Thereafter, gross domestic product is expected to climb to 2.9% each in 2013 and 2014, before slowing to 2.8% in 2015.

The Chancellor announced a reduction in corporation tax by 2% from this April to 26% with a target rate of 23%.

UK Mortgage Approvals Increase

The number of mortgage approvals for home purchase by UK banks increased in February, latest data from the British Bankers'' Association showed today.

Lenders approved 29,923 home purchase mortgages in February compared to 29,159 granted in January.

In terms of value, home purchase mortgage approvals were worth £4.3 billion in February compared with January''s £4.1 billion.

Total mortgage approvals in February increased to 72,309 from 70,776 in January. Their value came in at £8.3 billion, an increase from previous month''s £7.9 billion.

Colgate-Palmolive Acquires Sanex Brand

Colgate-Palmolive Co. announced a deal to purchase Unilever Plc''s Sanex personal care brand for €672 million or about $940 million. Colgate agreed to sell its laundry detergent business in Colombia to Unilever for $215 million in connection with the Sanex acquisition.

Gainers & Losers

Ferrexpo plc surged 3.25% to 415.60 pence after the iron ore pellet producer reported full year 2010 revenue advanced 99% to $1.29 billion from $648.67 million last year. Profit for the year surged 499% to $422.91 million or $0.72 per share from $70.63 million or $0.12 per share last year.

Hammerson plc gained 0.71% to 452.20 pence after the real estate investment trust exchanged contracts to acquire a portfolio of six assets from property and asset management firm St. Martins Property Investments Ltd. for £208 million.

In a separate announcement, Hammerson agreed to acquire the remaining 75% stake in Central Retail Park in Falkirk from the U.S. pension fund manager TIAA-CREF College Retirement Equities Fund for £69 million, including costs.

Hansteen Holdings plc fell 0.29% to 87.25 pence after the real estate investor reported fiscal year 2010 revenue surged 74.4% to £67.83 million from £38.89 million in the previous year on doubled property portfolio. Net profit for the year was £30.5 million or 6.7 pence per share reversing a loss of £12.1 million or 3.9 pence per share incurred in 2009.

J Sainsbury Plc plunged 6.24% to 332.20 pence after the retailer reported total sales for the fourth quarter, including fuel increased 6.8% from last year.

The Royal Bank of Scotland Group plc fell 1.77% to 41.05 pence after the lender said it sold a portfolio of its commercial real estate loans and assets in Spain to Perella Weinberg Real Estate Fund I LP. The portfolio has a par value of €286 million and the bank said the deal proceeds would be in cash.