UK Indexes Plunge 2.5%; Construction Activity at 8-Month Low

Arthi Gupta
02 Sep, 2011
New York City

The UK indexes extended losses after construction activity slid to an eight-month low in August and orders declined in the second quarter. Smiths Interconnect acquired Power Holdings for $235 million. LSE confirmed takeover talks with LCH.Clearnet.

[R]3:00 PM London – The UK indexes extended losses after construction activity slid to an eight-month low in August and orders declined in the second quarter. Smiths Interconnect acquired Power Holdings for $235 million. LSE confirmed takeover talks with LCH.Clearnet.[/R]

UK indexes fell after worries on the euro area debt crisis resurfaced and the U.S. employment was weaker than expected.

These fears were compounded after Greek authorities were not able to reach an agreement with the European Union, International Monetary Fund and European Central Bank on the country’s ability to meet its deficit targets with the necessary budget cuts.

In London, FTSE 100 Index slumped 137.41 or 2.53% to 5,280.94 and the pound edged higher to $1.6216. For the week, the FTSE 100 Index soared 4.7%.

UK Construction Activity Slows

UK construction sector activity slowed more than expected in August, latest survey results from Markit Economics showed.

The headline Markit/CIPS purchasing managers'' index for the construction sector fell to 52.6 in August from 53.5 in July.

UK Construction Orders Drop

New orders in UK''s construction sector declined 16.3% sequentially in the second quarter, data released by the Office of National Statistics showed on Friday.

The value of new construction orders dropped to £9.50 billion in the second quarter from £11.35 billion in the first quarter.

Shell to Sell Stake to Infragas Norge

A/S Norske Shell, the wholly-owned subsidiary of Royal Dutch Shell Plc agreed to sell its interests in natural gas transport infrastructure joint venture Gassled to Infragas Norge AS for 3,925 million Kroner or $730 million, as part of its strategy of exiting non-strategic assets and focusing on major growth projects.

Smiths Interconnect Buys Power Holdings

Smiths Group plc, the global technology company said its Interconnect division has purchased Power Holdings Inc., a designer and manufacturer of specialist power distribution, conditioning and monitoring systems, for $235 million.

LSE Confirms LCH.Clearnet Talks

London Stock Exchange Group plc today confirmed recent speculations that it is in discussions with swaps clearinghouse LCH.Clearnet Group Ltd. regarding a potential transaction. LSE''s bid reportedly values LCH at around €1 billion or $1.4 billion.

The company said the discussions are at an early stage and it is not certain whether any action or agreement will result.

Gainers & Losers

AstraZeneca Plc slumped 3.84% to 2,804 pence after the biopharmaceutical company stated its cholesterol drug Crestor failed to demonstrate statistical significance in reduction in the progression of atherosclerosis in high risk patients over Pfizer''s Lipitor.

BP plc, the oil and gas explorer slumped 4.5% to 371.05 pence after Halliburton Co. said it filed a lawsuit in Texas against BP claiming ""negligent misrepresentation, business disparagement and defamation"" related to the April 20, 2010 oil rig explosion in the Gulf of Mexico.

Compass Group Plc dipped 0.45% to 549.50 pence after the global contract foodservice and support services company acquired Cygnet Foods Holdings Ltd. from James Cartwright and Ian Cartwright.

EMIS Group plc soared 3.3% to 525 pence after the software company reported first-half revenue increased 24% to £35.5 million from £28.7 million reported in the first half of 2010. Operating profit in the period rose 27% to £10.2 million compared to £8.0 million reported in the corresponding first-half in 2010.

Randall & Quilter Investment Holdings plc plummeted 6.3% to 104 pence after the holding and investment company said first-half total income rose 17.1% to £18.8 million, from £16.1 million the year before. Pre-tax profit for the period fell 48% to £3 million from £5.8 million last year.