UK Indexes Fall; Rolls-Royce Wins $500 Million Saudi Order

Arthi Gupta
14 Nov, 2011
New York City

The UK indexes declined as Italy and Greece race to implement austerity measures. Irish construction activity fell again in October. Rolls-Royce won a $500 million order from Saudi Arabian Airlines. Lonmin fiscal 2011 revenue rose 26% and net more than doubled.

[R]2:30 PM London – The UK indexes declined as Italy and Greece race to implement austerity measures. Irish construction activity fell again in October. Rolls-Royce won a $500 million order from Saudi Arabian Airlines. Lonmin fiscal 2011 revenue rose 26% and net more than doubled.[/R]

The UK indexes pared gains in cautious trading after Greece and Italy race to implement austerity measures demanded by international lenders with the help of new technocratic government.

The UK banks are bracing for widespread losses if Greece and Italy fail to reign in rising debts and balance budgets.

Investors are worried that rising bond yield for Italy may force earlier than expected restructuring of Italian bonds that will force banks in France, UK and Germany to take as much as 300 billion in loan losses. The disaster scenario appears to be unlikely for now, but situation can go out of control if technocratic governments fail to show results.

Mario Monti was appointed Italy''s new prime minister on Sunday, after Silvio Berlusconi resigned on Saturday.

However, the task ahead for technocrat led Monti-government is not easy. Italian economy has stagnated for more than a decade, labor markets are rigid and tax evasion is widespread. In addition, the government debt is still growing.

In London, FTSE 100 Index declined 20.77 or 0.4% to 5,524.61 and the pound edged higher to $1.5946.

Irish Construction Activity Drops

Irish construction activity fell again in October, although new business stabilised during the month, according to the latest purchasing managers’ survey from Ulster Bank.

The seasonally adjusted purchasing managers'' index for the construction sector rose to 45.2 in October from 40.1 in September. The rate of contraction in October was the weakest in seven months.

Rolls-Royce Secures Saudi Arabian Airlines Order

Rolls-Royce Group plc, the engine manufacturer said it won an order from Saudi Arabian Airlines, worth up to $500 million, to provide engines and support for four Airbus A330 aircrafts.

Gainers & Losers

Entertainment One Ltd. fell 0.4% to 198.15 pence after the international entertainment group said first-half revenue edged up 1% to £204.6 million from £202.5 million. Profit before tax for the period was £9.8 million compared to a loss of £1.5 million in the prior-year.

Eros International Plc slumped 3.5% to 260.52 pence after the integrated media and entertainment company said first-half revenue rose 35.3% to $91.99 million from $67.98 million in the comparable period a year ago. Profit for the period fell 7.5% to $21.66 million or 18.43 cents per share compared to $23.41 million or 19.87 cents per share in the prior-year period.

Lonmin Plc rose 1.4% to 1,089 pence after the precious metals miner reported fiscal year 2011 revenue advanced 25.7% to $1.992 billion from $1.585 billion in the prior year. Profit for the year soared 144% to $273 million from $112 million in the prior year. Underlying earnings rose to 111.6 cents per share from 70.2 cents per share.

Rolls-Royce Holdings plc declined 1.3% to 728.50 pence after the engine manufacturer said it won a $280 million order, at list prices, from Garuda Indonesia Airlines for Trent 700 engines to power four Airbus A330 aircraft.

Vectura Group plc soared 4.2% to 67.75 pence after the company that specialises in developing inhaled therapies reported revenue for the six months ended September 30 declined 19.8% to £21.1 million from £26.3 million in the prior year. Pre-tax profit for the period was £1.1 million compared to pre-tax loss of £0.6 million a year ago.