UK Indexes Rise; News Corp. Leadership Change Anticipated

Arthi Gupta
19 Jul, 2011
New York City

The UK indexes traded higher on upbeat global earnings. News Corp. chief executive Rupert Murdoch, his son James and former chief of News International Rebekah Brooks will appear before a parliamentary committee today. Irish factory gate prices fell in June.

[R]3:40 PM London – The UK indexes traded higher on upbeat global earnings. News Corp. chief executive Rupert Murdoch and Deputy COO James Murdoch faced direct questioning from members of parliament about the methods of payment for prior phone-hacking related incidences. Irish factory gate prices fell in June.[/R]

News Corp. chief executive Rupert Murdoch and James in testimony before the Parliament committee defended past company practices of settlements with past phone hacking scandals victims.

Rupert Murdoch said in his testimony that News Corp was “not ever” guilty of “willful blindness” of wrongdoing.

James Murdoch was forced to defend his payments of as much as one million pounds for settlements and avoided answering how these payments were accounted and what are the company practices in disclosing these payments.

Separately, News Corp. is considering Chase Carey, deputy chairman, president and COO to succeed Rupert Murdoch for the top post of CEO, according to a Bloomberg report on Monday.

The decision to promote Carey is expected to be taken after Murdoch's testimony before the British parliament.

The anticipated move follows the growing concern among the News Corp's board members and executives about Murdoch's ability to stem the fallout from the phone-hacking scandal in the UK.

In London, FTSE 100 Index gained 38.54 or 0.7% to 5,792.34 and the pound edged higher to $1.6123.

UK Growth Outlook Forecast

UK gross domestic product is estimated to increase 1.4% in 2011, slower than the 1.8% expansion predicted earlier, according to Ernst & Young's think tank ITEM Club. The group lowered its growth outlook for the United Kingdom citing the ongoing global financial uncertainty as well as the European debt crisis.

Consumer spending is estimated to decrease 0.4% and inflation is forecast at 4.5% this year.

Irish Manufacturing Drops, Surplus Soars

Ireland's manufacturing output price index decreased 1% from a year ago in June compared to the 0.6% decrease recorded in May, according to data released by the Central Statistics Office on Tuesday.

Capital goods prices declined 6.6% and durable consumer goods prices decreased 3% in June.

Producer prices declined 0.8% on a monthly basis in June reversing the 1.3% increase in May.

Separately, Ireland's seasonally adjusted trade surplus soared 44% to €3.78 billion in May from €2.63 billion in April, preliminary data released by the Central Statistics Office showed today.

Export of goods remained almost unchanged at € 7.5 billion and imports decreased a seasonally adjusted 24% from the previous month to €3.73 billion in May.

BAA to Sell Two Airports

The Competition Commission confirmed today that British Airports Authority, a Spanish-owned operator of six British airports, would be required to sell Stansted Airport followed by Edinburgh or Glasgow Airport.

The CC concluded that the sale of the airports is fully justified and that passengers and airlines would still benefit from greater competition with the airports under separate owner-ship.

Gainers & Losers

Fuller, Smith & Turner PLC gained 0.82% to 707 pence after the pubs and brewing group confirmed that it has no intention to make an offer for Capital Pub Company Plc.

Henderson Group Plc surged 4.56% to 155.90 pence after the investment management firm estimated first-half underlying profit to be between £83 million and £87 million, up from £48.5 million reported in the prior year.

IG Group Holdings Plc soared 5.18% to 432.70 pence after the financial derivatives and sports betting company stated fiscal year 2011 revenue grew to £362.37 million from £350.22 million a year ago. Loss in the period was £25.45 million or 7.05 pence per share compared to a profit of £101.28 million or 28.00 pence per share in the prior year.

Johnson Matthey Plc gained 4.02% to 2,016 pence after the auto catalysts and precious metals maker reported first quarter sales, excluding sales of precious metals, grew 12% to £617 million and underlying profit before tax increased 19% from last year to £98.2 million.

Royal Bank of Scotland Group Plc rose 0.30% to 33.07 pence after the bank announced that Nathan Bostock is leaving as Head of Restructuring & Risk.