UK Indexes Plunge 3.8%; Construction Stagnates

Arthi Gupta
04 Oct, 2011
New York City

The UK indexes plunged on the worsening sovereign debt crisis in Europe. The UK construction activity stagnated in September. Ireland''s central bank lowered economic growth outlook for 2012. Wolseley swung to profit in fiscal year 2011.

[R]3:30 PM London – The UK indexes plunged on the worsening sovereign debt crisis in Europe. The UK construction activity stagnated in September. Ireland''s central bank lowered economic growth outlook for 2012. Wolseley swung to profit in fiscal year 2011.[/R]

The UK indexes slumped nearly 4% after the euro-zone finance ministers decided to put off the decision on the next loan instalment for Greece, worth €8 billion, until the troika report on the country''s progress with the fiscal targets is ready.

Eurogroup President Jean-Claude Juncker said that a meeting, tentatively scheduled for October 13 to decide on the next loan tranche for Greece, has been canceled as the troika''s report will not be ready. He further indicated that no decision is likely until November.

Consumer price inflation in the Organization for Economic Cooperation and Development area increased for the second straight month in August, latest data showed.

In the UK the rate of inflation rose to 4.5% from a year ago in August from 4.4% in July.

In London, FTSE 100 Index plunged 192.71 or 3.8% to 4,881.14 and the pound edged lower to $1.5386.

UK Construction Activity Stagnates

Construction sector activity in the UK slowed in September to reach levels close to stagnation, a survey by Markit Economics showed today.

The Markit/Chartered Institute of Purchasing & Supply purchasing managers'' index fell to 50.1 in September from 52.6 in August, as a result of contraction in new orders.

Ireland’s Central Bank Lowers 2012 Outlook

Ireland''s central bank in its quarterly bulletin lowered its economic growth estimate for next year, while it lifted outlook for 2011.

The bank estimates 1% growth this year despite a slowdown in economic growth in the latter part of 2011. That was bigger than the 0.8% estimated in July.

The expansion in gross domestic product is forecasted to be 1.8% instead of 2.1% in 2012.

The unemployment rate is projected to fall slightly to 14% next year from an average of 14.2% in 2011.

Gainers & Losers

Clarity Commerce Solutions Plc soared 15.1% to 25.32 pence after the software solutions supplier said its board unanimously rejected the £9.53 million cash offer from Enigmatic Investments Ltd., as it believes that the offer is highly ""opportunistic"" and undervalues the company and its prospects.

Heritage Oil Plc fell 2.5% to 218.60 pence after the oil producer announced the acquisition of a 51% controlling interest in Sahara Oil Services Holdings Limited for a cash consideration of $19.5 million, in an effort to gain access to key oil producing fields and other license opportunities in Libya.

HSBC Holdings Plc slumped 3.1% to 472.60 pence after the global banking and financial services organization said HSBC Bank Plc, its wholly owned subsidiary, sold Cambridge Water Plc to South Staffordshire Plc, an indirect wholly-owned subsidiary of investment funds managed by Alinda Capital Partners.

St. Ives Plc soared 8.7% to 75 pence after the print services provider reported for the year ended July 29, revenues edged up 2% to £297.24 million from £291.47 million last year. Profit before tax grew 28.3% to £16.9 million from £13.2 million a year ago.

Further, St. Ives said its board has recommended doubling the final dividend to 3.50 pence per share from the 1.75 pence per share paid in 2010.

Wolseley Plc dropped 2.9% to 1,491 pence after the plumbing and heating products distributor reported fiscal year 2011 revenues grew 3% to £13.56 billion from £13.2 billion in the previous year. On a like-for-like basis, the growth was 5%.

Pre-tax profit for the period was £391 million compared to a pre-tax loss of £328 million a year ago.