UK Manufacturing Activity Eases; 3i Down 5%

Arthi Gupta
01 Apr, 2011
New York City

The UK indexes surged after successful completion of stress tests in Ireland and a rating agency lowered Irish debt view. The UK manufacturing sector growth eased in March. Shell agreed to sell Chilean downstream business to Quinenco for $614 million.

[R]4:00 PM London – The UK indexes surged after successful completion of stress tests in Ireland and a rating agency lowered Irish debt view. The UK manufacturing sector growth eased in March. Shell agreed to sell Chilean downstream business to Quinenco for $614 million.[/R]

The UK Foreign Office urged all British nationals in Yemen to leave the Middle-East nation immediately on the ""rapid deterioration"" in the security.

The warning came amidst an ongoing violent unrest in Yemen. It is estimated that more than 100 people have been killed in crackdowns by security forces since the protests began nearly a month ago. The protesters want President Saleh to step down from power immediately and are calling for greater freedom.

In London, FTSE 100 Index gained 99.00 or 1.67% to 6,008.75 and the pound edged lower to close at $1.5976. For the week, the FTSE 100 Index gained 1.3%.

Ireland to Merge Two Banks, Inject €24 billion

The Irish Central Bank said four Irish banks need another €24 billion or $34 billion in cash to restore market confidence after a stress test.

Allied Irish needs €13.3 billion, while Bank of Ireland needs €5.2 billion, Irish Life and Permanent needs €4 billion, and EBS Building Society requires €1.5 billion. Banks will need to raise capital before 2013.

A radical reform of the banking sector includes the merger of EBS Building Society into the nation''s second largest lender Allied Irish Bank.

IL&P will be restructured, with the Irish government likely to take a majority stake, according to reports that also suggest the company will need to sell its Irish Life business.

After the financial restructuring only two large banks will survive a restructured Bank of Ireland and the combination of Allied/EBS.

S&P Lowers Irish Credit Rating

Standard & Poor''s on Friday lowered Ireland''s credit rating by one notch to BBB+ from A-, but said the outlook is stable.

S&P said last week''s European Council meeting confirmed its view that sovereign debt restructuring is a possible pre-condition to borrowing from the European Stability Mechanism and senior unsecured government debt will be subordinated to ESM loans.

Separately, Fitch Ratings downgraded Royal Dutch Shell plc''s and Royal Dutch/Shell Group''s Long-term Issuer Default Ratings to ''AA'' from ''AA+'', with stable outlooks, and also affirmed the short-term IDRs of both entities at ''F1+''.

UK Manufacturing PMI Eases

UK''s manufacturing sector growth eased to a five-month low in March, on the back of slow growth in new orders, survey results from Markit Economics showed today.

The seasonally adjusted Markit/Chartered Institute of Purchasing & Supply Purchasing Managers'' Index slipped to 57.1 in March from a downwardly revised 60.9 in February.

The output prices index rose to 65.2 in March from 63.6 in February, the highest since the series began in 1999.

Irish PMI Drops

Ireland''s purchasing managers'' index dropped to 55.7 in March from 56.7 in February, a survey conducted by NCB and Markit Economics showed.

Output growth slowed in March, with the corresponding index declining to 57.8 from 60.9 in February, while the new orders index eased to 57.9 in March from 59.2 in February.

Shell Sells Downstream Business in Chile

Royal Dutch Shell plc announced a deal to sell most of its downstream business in Chile to business conglomerate Quinenco S.A. for a total consideration of about $614 million.

The proposed sale covers all Shell''s existing retail, commercial fuels, bitumen and chemicals businesses. It also includes related supply and distribution infrastructure in Chile.

Gainers & Losers

BP plc rose 2.95% to $45.44 after the oil giant signed four new coalbed methane or CBM production sharing contracts, along with its local partners, with the Indonesian government. Together, the four production sharing contracts cover an area of about 4,800 square kilometers in the Barito basin of South Kalimantan, Indonesia.

Computacenter plc gained 0.74% to 438.20 pence after the independent provider of IT infrastructure services in Europe, said its subsidiary, Computacenter UK Limited purchased a minority stake in ICS Solutions Limited, for a cash consideration amounting to £500,000.

Marks & Spencer Group PLC gained 0.50% to 338.40 pence after the retailer said that it will return to France towards the end of this year with a combined e-commerce and retail ''bricks & clicks'' strategy in line with its business plans announced in November.

According to the decision, Marks & Spencer will launch a new retail website, in French and trading in euros. The company will also open a new store in the heart of Paris on the Champs-Elysées towards the end of this year.

3i Group Plc plunged 5.15% to 283.50 pence after the private equity firm said it invested a total of £581 million in the 11-month period ended February 28, compared with £311 million in the same period last year.

The company noted £184 million was in new investment, £244 million were investment in the portfolio and the balance was capitalized interest.

Volvere plc fell 1.28% to 300.10 pence after the investment fund reported fiscal year 2010 total revenues plunged 18.3% to £8.9 million from 2009''s £10.9 million, on 19% slump in IPT, the company''s online marketing and data service segment.

Profit-before-tax for 2010 was £937,000 compared to £525,000 a year ago.