Irish Stress Test in Focus, UK Home Prices Rise

Arthi Gupta
31 Mar, 2011
New York City

The UK indexes gained after home prices rose in March. Ireland trade surplus fell in January. Taylor Wimpey agreed to sell North American business for $955 million. Vodafone paid $5 billion to buy Essar Stake in JV.

[R]3:45 PM London – The UK indexes gained after home prices rose in March. Ireland trade surplus fell in January. Taylor Wimpey agreed to sell its North American business for $955 million. Vodafone paid $5 billion to buy Essar Group’s stake in its India unit.[/R]

Investors focus on the Irish banks’ stress test results scheduled to be released later in the day. Bank of Ireland and Allied Irish Banks trading is temporarily suspended on the Irish stock exchange, pending the results of the stress tests.

Irish newspaper The Irish Independent reported this morning that the Irish government will pump in between €20 billion and €25 billion to its major banks to bolster their finances.

Foreign Minister Moussa Koussa, one of the most senior figures in Qadhafi's government, has fled to Britain, reports said.

Britain's Foreign Office confirmed the defection and said in a statement that Koussa traveled to London “under his own free will.”

In London, FTSE 100 Index gained 4.33 or 0.08% to 5,952.63 and the pound edged lower to close at $1.6045.

UK Home Prices Rise

UK home prices rose 0.5% on a monthly basis in March, slowing slightly from the 0.7% increase seen in February, the Nationwide Building Society said today.

On a yearly basis, home prices edged up 0.1% in March offsetting the 0.1% drop in February. The average cost of a house now stands at £164,751.

Separately, UK lenders reported that the default rate on secured loans to households rose unexpectedly in the first quarter, according to results of the latest Credit Conditions Survey of the Bank of England released today.

Ireland Trade Surplus Falls

Ireland's trade balance resulted in a surplus of €2.8 billion in January, smaller than €3.1 billion in December, the Central Statistics Office said on Thursday.

The statistics office also reported that in 2010, the rate of growth of exports was 6% and that of imports 1%. As a result, the trade surplus increased 12% compared to the previous year.

Taylor Wimpey Sells North American Business

Taylor Wimpey plc, the homebuilder agreed to sell its North American business to a private equity firm TMM Holdings Limited Partnership for a base consideration of $955 million or about £595 million.

The sale will help the company to focus on its core UK activities while providing increased financial flexibility.

Vodafone Buys Essar Stake in India Unit

Vodafone on Thursday acquired 33% stake of its Indian partner Essar in the joint venture Vodafone Essar for $5 billion.

Vodafone Group exercised its put option to sell over 22% stake in Vodafone Essar Ltd. In turn, Vodafone exercised its call option on the remaining 11% stake. With this, Ruia brothers-promoted Essar group will exit completely from the joint venture. Vodafone also said that final settlement is slated for completion by November, 2011.

The move will put Vodafone above the 74% limit that overseas companies are allowed to own in India.

Vodafone will increase its stake in the company to 75% from 42% with the transaction and will divest 1.3% stake to meet the Indian regulatory requirements.

Vodafone has over 130 million subscribers and is the third largest operator in India. India is the world's second-biggest market for mobile services and it is also the fastest growing market adding 19 million subscribers a month.

Inmarsat Acquires Ship Equip International

Inmarsat plc, the mobile satellite communications services provider said it will acquire Norway-based Ship Equip International A.S. for $159.5 million. Ship Equip is a provider of VSAT maritime communications services to the shipping, offshore oil & gas and fishing markets.

Gainers & Losers

Booker Group plc gained 1.34% to 60.50 pence after the food wholesaler said its total sales in the twelve weeks to March 25 grew 6.4% from last year. Total like-for-like sales for the twelve week period also rose 4.4% from the prior-year period.

Total sales in the 52 weeks period to March 25 were £3.6 billion, up 6.2% from last year and total like-for-likes rose 5.1% for the 52 week period.

Compass Group Plc dipped 0.09% to 558.50 pence after the food and support services company said it expects around 12% growth in underlying earnings per share and 9.5% rise in revenues for the first-half, both on constant currency basis. The company also backed its expectations for the full year.

ICAP plc declined 1.30% to 530.00 pence after the interdealer broker estimated fiscal 2011 pre-tax profits to be between £333 million and £357 million. In the prior fiscal, the company's profit before taxation from continuing operations was £247 million.

London Stock Exchange Group Plc dropped 0.18% to 836.50 pence after the bourse operator said its new issues in the 11 months ended February 28 increased 90% to 167 from last year's 88. Money raised by UK new issues increased more than three times to £9.8 billion.

Trading activity in the UK grew 2%.

Petrofac Ltd. increased 2.95% to 1,502.00 pence after the provider of facilities solutions to the oil and gas production and processing industry confirmed it received a contract, in excess of $240 million, from Shell Iraq Petroleum Development B.V. for developments in the Majnoon Field, Southern Iraq.

TUI Travel Plc fell 0.83% to 227.40 pence after the travel services provider said its trading in the first-half of the year has been in line with expectations against a “tough comparative period.”

The travel services provider also said that it has changed its capacity after the uprising in Egypt and North America and that will cost as guided earlier between £25 million and £30 million.