UK Growth Outlook Lowered; Interserve, Standard Life Net Rise

Arthi Gupta
10 Aug, 2011
New York City

The UK indexes slumped after the Bank of England trimmed its growth and inflation outlook. UK riots expand to three more cities on the fourth day. Ireland industrial production declined in June and new car registrations fell in July. Standard Life first-half net revenues rose 7.4% to £5.24 billion.

[R]4:10 PM London – The UK indexes slumped after the Bank of England trimmed its growth outlook and inflation forecast. UK riots expand to three more cities on the fourth day. Ireland industrial production declined in June and new car registrations fell in July. Standard Life first-half net revenues rose 7.4% to £5.24 billion.[/R]

UK market indexes plunged and reversed the early positive tone after markets in New York opened lower, gold and oil edged higher and European debt stress remained high.

The market sentiment has been on the edge with the spread of riots to Birmingham, Manchester and Bristol after three days of rioting and looting in London.

The Bank of England trimmed its growth outlook as well as inflation forecast. Inflation is forecast to fall back through 2012 and into 2013 before rising to 5% this year, the central bank said in its quarterly Inflation Report.

The central bank sees inflation falling below its 2% target in the medium term. By early 2013, inflation is expected to slow to 1.8%.

In a statement issued by the central bank, Bank of England lowered its economic outlook for this year to 1.4% from 1.8%. Mervyn King, the governor of BoE, in a speech after the statement said “headwinds are becoming stronger” and added “the weakness in underlying activity is likely to be somewhat more persistent than previously expected.”

The GDP growth is seen at around 2.7% in 2012, down from 2.8% estimated in May. By 2014, growth is likely to be above its historical average than below it, the bank said.

In London, FTSE 100 Index slumped 157.4 or 3% to 5,008.1 and the pound edged lower to $1.6171.

Ireland Output Drops

Ireland's industrial production index fell a seasonally adjusted 0.8% from a year ago in June following a 0.2% fall in May, according to data released by the Central Statistics Office today.

On a monthly basis, industrial production grew 0.5% in June, after rising 0.2% in May. Production rose for the third month in a row.

Manufacturing output gained 0.3% in June following a 0.1% increase in May.

Ireland New Car Registrations Fall

The number of new private cars registered in Ireland declined 0.9% in July to 6,953 from last year, the Central Statistics Office said on Wednesday.

The number of new vehicles registered in July fell 0.6% annually to 8,600. However, there was a 2.8% increase in registrations of new goods vehicles.

Capital One Acquires HSBC’s Domestic Credit Card Business

Capital One Financial Corp., the diversified financial services holding company agreed to acquire HSBC's domestic credit card and retail services business for a premium of about $2.6 billion.

The transaction includes HSBC's $30 billion credit card portfolio, for an 8.75% premium to par value of all receivables. Also, the company expects to realize cost synergies of around $350 million and estimates to incur restructuring costs of around $420 million.

Gainers & Losers

Dragon Oil plc surged 9.34% to 5.23 pence after the international oil and gas development and production company reported first-half revenues surged 91% to $527.4 million compared to $276.3 million a year ago. Profit in the period soared 125% to $309.4 million, or $0.60 per share, from $137.6 million, or $0.27 per share, in the prior year.

Interserve PLC surged 8.84% to 320 pence after the international support services and construction company said first-half revenue declined 2% to £928.0 million from £944.5 million for the corresponding period a year ago. Profit in the period grew 34% to £26.7 million or 20.7 pence per share from £20.0 million or 15.5 pence per share in the prior year.

Standard Life Plc rose 9.59% to 190.80 pence after the insurer reported first-half total net revenues grew 7.4% to £5.24 billion from £4.88 billion in the previous year. Net earned premiums for the period improved 2% to £1.64 billion from £1.61 billion in the preceding year.

S & U Plc plunged 5.19% to 547.50 pence after the consumer and motor finance provider said Loansathome4u, its home credit business increased revenues by 3% in the first-half against last year.

TUI Travel Plc climbed 0.06% to 167.60 pence after the leisure travel company reported third quarter revenue increased 13% to £3.78 billion from £3.35 billion in the year-ago period. Underlying operating profit for the quarter surged 57% to £88 million compared to £56 million in the prior year.