UK Annual Inflation Eases; Allied Irish Banks Plunges 10%

Arthi Gupta
12 Apr, 2011
New York City

Stocks declined in London after Japan struggled with more earthquakes. The UK retail sales dropped, home prices rose more than estimated and trade deficit narrowed. Aviva lowered its stake in Delta Lloyd NV. Punch Tavern revenues declined 3.6% in the first half.

[R]4:00 PM London – Stocks declined in London after Japan struggled with more earthquakes. The UK retail sales dropped, home prices rose more than estimated and trade deficit narrowed. Aviva lowered its stake in Delta Lloyd NV. Punch Tavern revenues declined 3.6% in the first half.[/R]

UK stocks declined tracking lower indexes in Europe and weaker opening in New York. UK home prices increase accelerated in February and trade deficit narrowed in the month. Retail sales increase was weaker than expected as job market remained weak.

The Japanese nuclear energy raised the severity of the nuclear threats to a rating of seven from five, same as the Chernobyl nuclear disaster in 1986.

In London, FTSE 100 Index declined 81.87 or 1.35% to 5,971.60 and the pound edged lower to close at $1.6345.

UK Home Prices Rise

The UK home prices rose 0.7% annually to £204,164 in February, from the 0.5% increase in January, the Department of Communities and Local Government said today.

During the month, costs of new properties grew 12.5% annually while those of pre-owned dwellings edged down 0.1%.

In a separate report, an index measuring the average price of a home in the United Kingdom rose to a seven-month high score of -23 in March, the Royal Institute of Chartered Surveyors said on Tuesday.

UK Trade Deficit Narrows

The merchandise trade deficit of the United Kingdom fell to £6.8 billion in February, from January''s shortfall of £7.8 billion, data released by the Office for National Statistics showed on Tuesday.

Exports rose £0.3 billion, while imports dropped £0.7 billion in February, the ONS said.

The deficit in trade with the European Union members rose to £3.9 billion in February from £3.6 billion in January. Exports to the region fell £6 billion and imports dropped £billion.

UK Annual Inflation Eases

The UK annual inflation slowed to 4% in March from 4.4% in February, data from the Office for National Statistics showed. However, inflation still continues to stay above the central bank''s 2% target.

On a monthly comparison, the Consumer Price Index increased to 0.3% in March slower than the 0.7% rise in February.

UK Retail Sales Drop

UK March total retail sales declined 1.9% from a year ago, when sales had risen 6.6%, boosted by Good Friday and Easter Saturday falling in the March trading period, according to data from the British Retail Consortium.

On a like-for-like basis, sales decreased 3.5% compared to a 4.4% increase in the year ago month, according to results from the BRC–KPMG retail monitor.

Aviva Prices Part of Delta Lloyd Stake

Aviva plc said that it priced the sale of part of its stake in Delta Lloyd NV at an offer price of €17.25 per share, resulting in gross cash proceeds of £381 million. The partial disposal consisted of a private placement of 25 million Delta Lloyd ordinary shares to qualified institutional investors.

British Land and Tesco Extends JV

Tesco British Land Property Partnership, an equal joint venture between British Land Co PLC and Tesco plc refinanced its Beaumont Leys Shopping Centre in Leicester.

The new £60 million, 5-year term loan facility, provided by Crédit Agricole Corporate and Investment Bank and Handelsbanken, was used to repay the existing bank loan on its maturity and return funds to the partners.

Gainers & Losers

Alliance Trust Plc fell 0.51% to 373.20 pence after the investment company stated revenues for fiscal year ended January 31 decreased 2.2% to £507.07 million from £518.67 million in the prior year.

Total profit for the year decreased 3.1% to £451.75 million from £466.40 million a year ago. Earnings per share dropped to 68.27 pence from 69.57 pence in the prior year.

Allied Irish Banks plc plunged 10.26% to $3.50 after the Irish lender reported fiscal year 2010 pre-tax loss widened 354% to €12.07 billion compared to 2009''s loss of €2.66 billion.

Annual net interest income plunged 36% to €1.84 billion from the prior year''s €2.87 billion, hit by a €306 million charge relating to the 2010 Eligible Liabilities Guarantee scheme initiated by the Irish Minister of Finance.

The bank also said it expects to reduce more than 2,000 staff in a phased manner over 2011 and 2012.

Eros International plc gained 2.56% to 240.00 pence after the media and entertainment company said it expects results for the financial year ended March 31, 2011 to be in line with its expectations.

ILX Group Plc surged 6.80% to 27.50 pence after the software group said it obtained a new cross-UK Government framework contract to provide a mentoring service to senior responsible owners who have the responsibility for leading major change initiatives across the public sector.

Punch Taverns plc plunged 5.60% to 75.05 pence after the pub operator reported revenues for the first-half declined 3.1% to £655.4 million from £676.6 million in the preceding year. The company''s loss before tax was £350.7 million compared to a profit of £70.3 million in the previous year.