UK Indexes Decline; Logica Surged on Earnings

Arthi Gupta
22 Feb, 2012
New York City

The UK indexes dipped on speculation if Greece would be able to fulfill the conditions set by its lenders. The Bank of England policy makers were split on asset purchase program. Centrica agreed to acquire portfolio of UK North Sea assets from British Gas for

[R]3:15 PM London – The UK indexes dipped on speculation if Greece would be able to fulfill the conditions set by its lenders. The Bank of England policy makers were split on asset purchase program. Centrica agreed to acquire portfolio of UK North Sea assets from British Gas for £246 million.[/R]

The UK indexes slid after investors were doubtful if Greece would be able to fulfill the conditions set by its lenders. UK based hedge funds have long been proponents of the demise of the euro and have taken a position that in the end Greece will default.

However, the latest Greek agreement will avert the financial crisis and provide the liquidity to financial system that will help restore the confidence in the local banks. Greek economy is still struggling and faltering as the government struggles to implement structural reforms and increase tax collection.

In addition, Fitch Ratings downgraded Greece''s long-term foreign and local currency Issuer Default Ratings to ''C'' from ''CCC''. The agency said a default is highly likely in the near term.

The Bank of England lifted its asset purchase program by £50 billion in February through a split vote as two members, David Miles and Adam Posen sought £75 billion increase, the minutes of the monetary policy meeting showed today.

However, the nine-member committee unanimously voted to retain the interest rate at a historic low of 0.50%. The meeting was held on February 8 and 9.

In London trading FTSE 100 Index declined 12.88 or 0.2% to 5,915.60 and the pound edged lower to $1.5675.

Shell Offers to Acquire Cove Energy

Royal Dutch Shell Plc announced an offer to acquire Cove Energy plc for 195 pence a share in cash or a total value of approximately £992.4 million or $1.56 billion.

Centrica Acquires Portfolio of UK North Sea Assets

Centrica plc, the parent company of British Gas reached an agreement with Total E&P UK Limited to acquire non-operated portfolio of producing oil and gas assets and associated infrastructure in the Central North Sea for a total cash consideration of $388 million or £246 million.

Gainers & Losers

Dialog Semiconductor Plc plunged 6.7% to €15.40 after the manufacturer of semiconductor based system solutions reported fourth quarter revenue surged 96.5% to $172.1 million from $87.6 million reported last year. Based on international accounting standards, net profit was $19.1 million or 28 cents per share.

DS Smith PLC soared 3.3% to 172.10 pence after the recycled packaging company completed a successful rights issue that will finance the purchase of Sweden based SCA Packaging.

Filtrona PLC climbed 0.3% to 408.80 pence after the plastic and fiber specialist said 2011 revenues rose 10% to £540.7 million compared to £489.6 million in 2010.

Logica PLC surged 7.7% to 87.70 pence after the business and technology service company said revenue for 2011 rose 6% to £3,921.3 million from £3,696.8 million in 2010. Full year orders rose 13% to £4.6 billion, driven by outsourcing orders up 23% to £2.2 billion.

Rexam Plc gained 5.7% to 406.40 after the packaging firm reported fiscal 2011 sales increased 2% to £4.73 billion from £4.62 billion last year. Profit before tax for the period increased 28% to £431 million from £338 million last year.