Public Sector Strike Paralyzes UK; Lloyds Surges 9%

Arthi Gupta
30 Jun, 2011
New York City

The UK indexes rose after home prices remained flat and consumer confidence dropped in June. Lloyds surged 9% after it proposed to cut 15,000 jobs to deliver

[R]3:30 PM London – The UK indexes rose after home prices remained flat and consumer confidence dropped in June. Lloyds surged 9% after it proposed to cut 15,000 jobs to deliver £1.5 billion of annual savings in 2014.[/R]

A 24-hour strike by public sector servants began in the UK today protesting against the pension reforms planned by the government.

Media reports said an estimated 750,000 people, including teachers and staff at job centers, tax offices, courts, museums and the UK Border Agency joined the nationwide strike. The strike caused longer than usual lines at Heathrow airport on fewer immigration agents.

The National Union of Teachers said about 85% of schools in England and Wales had been affected with the closure of many schools.

Chief Secretary to the Treasury Danny Alexander announced earlier plans to raise the pension age to 66 by 2020 and increasing public-sector workers'' pension contributions by an average of 3.2%.

The availability of credit to corporations remained broadly unchanged in the second quarter, the latest Credit Conditions survey from the Bank of England showed today.

In London, FTSE 100 Index gained 61.27 or 1.02% to 5,917.60 and the pound edged lower to $1.6014. For the first half the FTSE 100 index closed nearly unchanged.

UK Home Prices Remain Flat

Home prices in the UK remained flat in June compared to the previous month due to sluggish demand and subdued supply into the property market, data published by the Nationwide Building Society showed.

Home prices were unchanged in June, after rising 0.3% in May. The price of an average home in June was £168,205, 1.1% lower than a year ago.

UK Consumer Confidence Slumps

Confidence among British consumers slid in June following last month’s unique, feel-good circumstances of public holidays and the royal wedding, results of a key survey showed.

An index measuring consumer confidence in the United Kingdom declined to minus 25 in June, from minus 21 in May, GfK said today.

Barclays Agrees to Dispose Private Equity Fund Interests

Barclays Bank PLC agreed to dispose of a €520 million or £460 million portfolio of U.S. and European private equity interests held and managed by Barclays Capital, its investment banking division, to AXA Private Equity.

The portfolio includes investments in private equity funds as well as several direct private equity interests held by Barclays Capital. The portfolio does not include any investments managed by Barclays Private Equity.

Gainers & Losers

British Land Co Plc gained 0.58% to 603 pence after the largest property development and investment companies agreed to purchase Wardrobe Court, EC4, a 71,000 sq ft residential investment property in the heart of the City of London for £57 million, representing a capital value of £800,000 per sq ft.

HMV Group Plc fell 2.50% to 9.75 pence after the entertainment products retailer reported revenue for the year ended April 30 fell 10% to £1.15 billion from £1.28 billion. Loss for the year was £123.1 million or 29.1 pence per share compared to a profit of £49.2 million or 11.6 pence per share in the prior year.

John Wood Group Plc rose 1.10% to 644.50 pence after the British energy services company, in its pre-close trading update for the first-half, said it delivered good growth during the period and continues to anticipate full-year performance in line with its expectations.

Lloyds Banking Group Plc surged 9% to 48.62 pence after the financial services group plans to cut 15,000 middle-level jobs as part of its effort to deliver £1.5 billion of annual savings in 2014. Core tier 1 capital ratio in 2013 is anticipated to be in excess of 10%.

For 2014, net interest margin improvement is expected to be between 2.15% and 2.30%. The company also aims to cut its international presence to less than half of the 30 countries it currently has presence, while continuing to reduce its non-core assets.

Petrofac Ltd. dropped 2.65% to 1,504.00 pence after the service provider to oil and gas facilities stated it remains on track to deliver like-for-like net profit growth of at least 15% in 2011.

Taylor Wimpey Plc surged 3.37% to 37.76 pence after the homebuilder estimated in the first-half the completion of 4,550 homes in UK, 5.% lower than prior year, while average selling price is projected to rise around 1.2% to about £170,000.