UK Construction Eases; Xstrata Confirms Merger Talks

Arthi Gupta
02 Feb, 2012
New York City

The UK indexes traded flat after the UK construction sector eased in January. The Irish central bank trimmed growth outlook for 2012. AstraZeneca planned to cut 7,300 jobs.

[R]3:00 PM London – The UK indexes traded flat after the UK construction sector eased in January. The Irish central bank trimmed growth outlook for 2012. AstraZeneca planned to cut 7,300 jobs.[/R]

The UK indexes traded flat and AstraZeneca and Royal Dutch Shell reported weaker-than-estimated earnings.

France raised €7.962 billion and Spain sold €4.56 billion of debt at auctions today as borrowing costs fell.

Facebook Inc. on Wednesday filed with the U.S. Securities and Exchange Commission for an initial public offering to raise at least $5 billion.

In London trading FTSE 100 Index gained 5.19 or 0.1% to 5,796.28 and the pound edged higher to $1.5819.

UK Construction Activity Eases

Activity in the UK construction sector eased in January, data from a survey by Markit Economics and CIPS showed.

The seasonally adjusted purchasing managers'' index for the construction sector dropped to 51.4 in January from 53.2 in December. The sector expanded for the thirteenth consecutive month.

Irish Growth Outlook Trimmed

Ireland’s economy is forecast to grow 0.5% in 2012, much slower than the 1.8% expansion estimated in October, the central bank said in its quarterly bulletin today. The growth is expected to accelerate to 2.1% in 2013, the bank said.

Xstrata Confirms Speculation

Xstrata Plc confirmed media speculation regarding a merger approach from Glencore International Plc that could lead to a merger worth $82 billion.

The company said it is in talks with the Swiss commodity trader ""regarding an all share merger of equals which may or may not lead to an offer being made by Glencore for Xstrata."" The company added that there can be no certainty that any offer will be made.

Gainers & Losers

AstraZeneca PLC gained 1.2% to 3,089.50 pence after the drugmaker reported fourth quarter revenues increased 0.5% to $8.66 billion from $8.62 billion in the same quarter last year. Net profit in the quarter fell 8% to $1.49 billion compared to net profit of $1.62 billion posted a year ago. Earnings per $0.25 ordinary share were $1.16 compared to $1.14 last year.

The company plans to cut about 7,300 jobs and is expected to deliver an estimated $1.6 billion in annual benefits by the end of 2014, at an estimated total cost of $2.1 billion.

BHP Billiton Ltd. rose 1.9% to A$37.62 after the diversified natural resources company announced approval of $917 million in pre-commitment funding for the construction of a 100 million ton per year outer harbour facility associated with its Western Australia iron ore operations.

Royal Dutch Shell plc climbed 1.3% to 2,268.50 pence after the independent oil and gas company reported fourth quarter revenue improved 15% to $115.575 billion from $100.714 billion in the prior year. Net income in the quarter dropped 4% to $6.5 billion or $1.04 per share from $6.8 billion or $1.10 per share in the prior year.

Smith & Nephew Plc soared 4.6% to 640.50 pence after the medical devices firm reported fourth quarter revenue rose 4% to $1.106 billion from $1.067 billion in the prior year. Pre-tax profit for the quarter declined 19% to $210 million from $258 million in the prior year.

Unilever PLC plunged 3.9% to 2,003 pence after the Anglo-Dutch consumer products maker reported fiscal year 2011 turnover declined 5% to €46.47 billion from €44.26 billion in 2010. Full year net profit was flat at €4.252 billion from €4.244 billion last year and earnings per share was flat at €1.46.