FTSE in Correction With 9% Weekly Loss; Prudential Net Doubles

Arthi Gupta
06 Aug, 2011
New York City

The UK indexes slumped 2.7% on Friday, dropped 10% in the week and plunged 14% from the May peak. The UK home prices rose and output price inflation climbed in July. Hunting agreed to acquire TSI Acquisition for $775 million. Prudential first-half net surged but RBS swung to quarterly loss.

[R]4:30 PM, August 5, 2011, London – The UK indexes slumped 2.7% on Friday, dropped 10% in the week and plunged 14% from the May peak. The UK home prices rose and output price inflation climbed in July. Hunting agreed to acquire TSI Acquisition for $775 million. Prudential first-half net surged but RBS swung to quarterly loss.[/R]

In London, FTSE 100 Index slumped 122.12 or 2.26% to 5,273.47 and the pound edged higher to $1.6330.

For the week, the FTSE 100 Index declined 2.7%, down 10% in the year and plunged 14% from the peak 6,082 on May 3.

The index reached all time high on July 13, 2007 at 6,717.60 and is down 21%.

World markets have been on an accelerated slide since July 22 after the bond yields for Italy and Spain began to rise and flirt above 6% level sparking deep fears that the contagion is spreading to larger nations in Europe.

Market indexes in Italy, Spain and Switzerland are down more than 20% since the peaks in February. For the year, the index in France is down 12%, in Germany 9.2% and in the UK 11%. Italian index has plunged 26% from its peak in February and down 21% in the year.

UK Output Price Inflation Climbs

The UK output price annual inflation rose to 5.9% in July from 5.7% in June, data from the Office for National Statistics showed.

The annual increase in the cost of clothing, textiles and leather was 5.2%, the biggest since records began in January 1997.

The output price index rose 0.2% on a monthly basis in July as against the 0.1% rise in June, reflecting price rises in food, clothing, textiles and leather products.

Input price inflation accelerated to 18.5% in July from 16.8% in June. Monthly inflation increased to 0.6% in July from 0.2% in June, mainly reflecting price rises in crude oil and other imported materials

UK Home Prices Rise

The UK home prices increased for the third consecutive month in July, according to latest data from the Lloyds Banking Group Plc's Halifax division.

The average cost of a property in the UK rose 0.3% in July from June to £163,981.

Hunting Acquires TSI Acquisition

Hunting Plc, the energy services firm agreed to acquire TSI Acquisition Holdings LLC and its subsidiaries including Titan Specialties, Ltd. for a total consideration of $775 million or about £475 million.

Separately, the company announced the fully underwritten placing of 13.18 million new ordinary shares of 25 pence each, representing approximately 9.9% of the company's share capital.

Gainers & Losers

Bellway plc gained 1.03% to 635.50 pence after the residential property developer in its trading update, said that the group completed 4,922 homes, an increase of 7.1% from the previous year's total of 4,595. The average selling price of homes sold improved by 7.2% from £163,175 to around £175,000.

Logica Plc plunged 11.76% to 90.80 pence after the IT and business services provider reported first-half revenues rose 5% to £2.0 billion, with double digit growth in France and Northern and Central Europe regions. Pre-tax profit in the period declined 13% to £75 million compared to last year's £86 million, on statutory basis.

Old Mutual plc fell 1.59% to 111.30 pence after the long-term savings group said first-half total revenues rose 0.2% to £6.45 billion from £6.44 billion in the prior year. Profit for the period soared 85% to £489 million or 8.8 pence per ordinary share from £265 million or 4.7 pence per ordinary share a year-ago quarter.

Prudential Plc dropped 0.56% to 626.50 pence after the insurer reported first-half total revenue, net of reinsurance rose 26.8% to £21.60 billion from £17.04 billion in the year earlier period. Net profit in the period surged 95% to £861 million or 33.9 pence per share compared to £442 million or 17.5 pence per share last year.

Royal Bank of Scotland Group plc declined 1.72% to 29.76 pence after the bank reported second quarter attributable loss of £897 million versus a profit of £257 million in the same period the previous year, impacted by a £850 million charge for PPI claims and £733 million provision related to Greek government bonds.

Net interest income for the quarter decreased 12.2% to £3.23 billion from £3.68 billion in the prior-year period.

Smith & Nephew plc dipped 0.18% to 563 pence after the medical devices company reported second quarter revenues grew 12% to $1.077 billion, from last year's $959 million. Profit for the quarter rose 12% to $153 million or 17.1 cents per diluted share compared to $137 million or 15.4 cents per share in the year-ago quarter.