UK Indexes Decline on French Bank Downgrades

Arthi Gupta
24 Jan, 2012
New York City

The UK indexes fell and public sector borrowing decreased more than anticipated and Irish home prices fell in December. HSBC agreed to sell its Latin American businesses to Colombia''s Davidienda for $801 million.

[R]2:50 PM London – The UK indexes fell and public sector borrowing decreased more than anticipated and Irish home prices fell in December. HSBC agreed to sell its Latin American businesses to Colombia''s Davidienda for $801 million.[/R]

The UK indexes dropped tracking the weakness in the European markets and continued jitters in the bond market as Greece and bankers negotiate the bond restructuring. Banks closed lower after three French banks credit outlook was revised downward.

The impasse between Greece and its private creditors continues as both parties remain apart on the Greek proposal of 70% reduction in bond repayment. Spain successfully sold €2.51 billion short-term debt today amid lower yield and higher demand.

In London, FTSE 100 Index declined 47.35 or 0.8% to 5,735.40 and the pound edged higher to $1.5582.

UK Public Sector Borrowing Falls

The UK public sector borrowing fell in December but debt exceeded £1 trillion for the first time on record, the Office for National Statistics said Tuesday.

Public sector net borrowing excluding financial interventions fell to £13.7 billion in December from £17.94 billion in November. The borrowing was £15.91 billion during December 2010.

Irish Home Prices Fall

Ireland''s residential property price index decreased 16.7% from a year ago in December compared to the 15.6% drop recorded in November, data released by the Central Statistics Office showed.

In Dublin, residential property prices decreased 19.3% on an annual basis in December, while in the rest of Ireland prices fell 15.1%.

On a monthly basis, overall residential property prices declined 1.7% in December, following the 1.5% decrease in November.

Gainers & Losers

Casdon PLC surged 73%% to 51 pence after the toy maker said first-half revenue rose 4% to £3.34 million from £3.21 million and pre-tax profit surged 150% to £317,571 from £126,914 in the prior year.

Chemring Group PLC plunged 11.7% to 396.30 pence after the military equipment maker said fiscal year 2011 revenues rose 25% to £745.3 million compared to the year before. Underlying profit before tax climbed 6% to £125.6 million in the year to the end of October.

HSBC Holdings PLC dipped 1% to 539.50 pence after the global banking and financial services organizations agreed to sell its businesses in Costa Rica, El Salvador and Honduras to Colombia''s Banco Davivienda S.A. for $801 million.

Land Securities Group Plc dropped 2.2% to 676.50 pence after the real estate investment trust said Robert Noel will succeed Francis Salway as its Chief Executive Officer.

Sage Group Plc fell 2% to 303.80 pence after the business software firm said its trading performance since the start of the year has been satisfactory and is in-line with its full-year expectations.