UK Inflation Eases to 4.2%; Sumitomo Mitsui, RBS in $7.3 B Deal

Arthi Gupta
17 Jan, 2012
New York City

The UK indexes rose after annual inflation eased in December. Japan-based Sumitomo Mitsui agreed to acquire the aircraft leasing business of RBS for $7.3 billion and DS Smith proposed to buy the packaging division of Sweden-based Svenska Cellulosa for

[R]3:30 PM London – The UK indexes rose after annual inflation eased in December. Japan-based Sumitomo Mitsui agreed to acquire the aircraft leasing business of RBS for $7.3 billion and DS Smith proposed to buy the packaging division of Sweden-based Svenska Cellulosa for €1.6 billion.[/R]

The UK indexes traded higher on mixed economic data. The UK annual inflation eased in December but leading economic index decreased in November.

Global indexes edged higher after China reported faster than expected economic expansion, German confidence rebounded and New York manufacturing activity improved in January.

Spain, Belgium and Greece successfully placed bonds amid strong demands. Investors focused on the busy earnings season and economic data from the region and China.

The Bank of England''s supervisory panel, known as the Court, backed the Treasury Committee''s recommendation that future Governors of the Bank should be appointed for a single eight-year term. Currently, single term runs five years.

In London, FTSE 100 Index gained 33.56 or 0.6% to 5,691.01 and the pound edged higher to $1.5399.

UK Leading Index Declines

The leading economic index of the UK economy decreased to 102.5 in November from 103.1 in October, data from a survey by the Conference Board showed.

The coincident economic index, which measures the current situation, remained unchanged at 10.2.4 in November, after rising 0.1% in October.

UK CPI Eases

The UK annual inflation eased to 4.2% in December from 4.8% in November, data from the Office for National Statistics showed today. The rate continues to hover well above the 2% central bank target.

On a monthly basis, inflation doubled to 0.4% in December from 0.2% in November.

Retail price annual inflation eased to 4.8% in December from 5.2% in November.

Sumitomo Mitsui to Acquire Aircraft Leasing Business of RBS

Japan-based Sumitomo Mitsui Financial Group, Inc. agreed to acquire the aircraft leasing business of British financial services provider Royal Bank of Scotland Group Plc for about $7.3 billion.

Kennametal to Buy Deloro Stellite

Kennametal Inc., a supplier of tooling, engineered components and advanced materials agreed to purchase Deloro Stellite Group from UK-based private equity firm Duke Street Capital for approximately €277 million.

Gainers & Losers

Burberry Group Plc fell 1.2% to 1,284 pence after the luxury group reported third quarter total revenue from continuing operations grew 21% to £574 million from £470 million in the prior year.

DS Smith Plc soared 4.7% to 213.10 pence after the supplier of recycled packaging for consumer goods and office products proposed to acquire the packaging division of Sweden''s Svenska Cellulosa Aktiebolaget SCA for a net consideration of about €1.6 billion, or about $2 billion.

Rio Tinto PLC climbed 2.4% to 3,673.50 pence after the Anglo-Australian mining firm reported fourth quarter global iron ore production increased to a record of 65 million tonnes. For the year 2011, global iron ore production was 245 million tonnes ahead of the estimate of 240 million tons set by the company.

Ryanair Holdings Plc gained 2% to €3.85 after the low cost airline confirmed that it will create over 1,000 new jobs in 2012 for pilots, cabin crew, engineers and sales/marketing people, and its fleet of planes is expected to expand to 305 from 270 aircrafts.

Taylor Wimpey Plc surged 3% to 41.99 pence after the homebuilder estimated an increase of over 80% in operating profit for the second-half of 2011.