News Corp. Drops BSkyB Bid; Ireland Debt Downgraded

Arthi Gupta
13 Jul, 2011
New York City

The UK indexes edged higher after China reported positive GDP data. The UK jobless rate was 7.7%. Ireland''s government bonds cut to junk status. News Corp. withdrew its bid for BSkyB after company faces systemic problems with news gathering techniques.

[R]3:20 PM London – The UK indexes edged higher after China reported positive GDP data. The UK jobless rate was 7.7%. Ireland''s government bonds cut to junk status. News Corp. withdrew its bid for BSkyB after company faces systemic problems with news gathering techniques.[/R]

The UK benchmark indexes see-sawed as investors awaited more details on Greek bailout and focused on growing UK bank exposure to the euro-zone debt contagion. Investors took a note of better than expected increase in China’s economic expansion.

China''s gross domestic product rose 9.5% on year in the second quarter of 2011, following the 9.7% increase in the first quarter, the statistics bureau said on Wednesday.

Another report showed industrial production surged 15.1% and retail sales expanded 17.7% in June.

In London, FTSE 100 Index declined 14.83 or 0.26% to 5,853.29 and the pound edged higher to $1.5950.

Ireland Credit Ratings Cut

Moody''s Investors Service on Tuesday downgraded Ireland''s foreign- and local-currency government bond ratings by one notch to Ba1 from Baa3. The outlook on the ratings remains negative.

Moody’s cited that Ireland is likely to need further rounds of official financing before it can return to the private market, and the increasing possibility that private sector creditor participation will be required as a precondition for such additional support.

Ireland becomes the third euro area country after Greece and Portugal to be lowered to junk by Moody''s.

UK Unemployment Falls to 7.7%

UK unemployment rate for three months to May was 7.7%, fell 0.1 percentage point from the previous three month period. The number of unemployed decreased 26,000 in the quarter to 2.45 million.

The number of people claiming jobseeker''s allowance in the UK rose 24,500 in June from May, according to a report published by the Office for National Statistics today. The increase for May was revised to 22,500 from 19,600.

Gainers & Losers

BP plc gained 0.2% to 454.20 pence after the oil and gas explorer reported a £3 billion re-development of the Schiehallion and Loyal oil fields to the west of the Shetland Islands.

Burberry Group plc surged 3.6% to 1,488 pence after the luxury fashion house said first quarter total underlying revenue grew to £367 million, with retail revenues rising 49% and wholesale up 11%.

ICAP Plc fell 0.7% to 477.40 pence after the interdealer broker said first quarter revenue fell 4% from last year.

JD Wetherspoon Plc declined 0.8% to 438.90 pence after the pub chain operator reported like-for-like sales increased 1.6% and total company sales rose 7.1% in the 11 weeks to July 10.

Marks & Spencer Group Plc slumped 3.5% to 360.10 pence after the retailer reported a 3.2% increase in first quarter sales, excluding VAT driven by improved sales in food and clothing.

BSkyB declined 0.9% to 686 pence after UK lawmakers united against the News Corp’s bid to increase its stake in the company.

News Corp may be forced to sell other UK newspapers including Sun, The Times and The Sunday Times as lawmakers press for a greater scrutiny of the media behemoth.

Rupert Murdoch controlled News Corp is also likely to face U.S. inquiry into its news gathering practices that may have criminal penalties.