UK Construction Falls; LSE Acquires Majority Stake in LCH.Clearnet

Arthi Gupta
09 Mar, 2012
New York City

The UK indexes climbed after Greece attracted 86% participation in debt swap. The UK construction output fell in January and production and orders improved in the first quarter. LSE agreed to acquire a majority stake in LCH.Clearnet for

[R]3:30 PM London – The UK indexes climbed after Greece attracted 86% participation in debt swap. The UK construction output fell in January and production and orders improved in the first quarter. LSE agreed to acquire a majority stake in LCH.Clearnet for £386 million.[/R]

The UK indexes gained on positive developments in Europe and better-than-anticipated jobs data from the U.S.

The U.S. economy added a net of 227,000 jobs in February, with a gain of 233,000 jobs in the private sector offsetting losses in public sector employment, according to data released by the U.S. Labor Department today.

The unemployment rate was stable at 8.3% in February.

UK’s inflation expectations for the year ahead eased to 3.5% in February. The UK construction output fell in January, manufacturers'' production and orders improved in the first quarter and output price inflation rose in February.

In Europe, Greece successfully completed the landmark bond swap deal with 85.8% of its private bond holders agreeing to participate in the debt restructuring.

Greece will use collective action clause to increase the participation rate to 95% and is less likely to be challenged in courts.

Greece said that holders of €177 billion Greek bonds agreed to the exchange and 69% of holders of Greek bonds issued under different laws worth €20 billion agreed as well. The high participation rate will save Greece from defaulting on its latest repayment due in ten days.

The Greek Finance Ministry stated the country received tenders and consents for €152 billion under Greek law and an additional €20 billion of foreign-law bonds were also tendered, and also extended the tender on foreign-law bonds to March 23.

In London trading FTSE 100 Index gained 9.40 or 0.2% to 5,868.54 and the pound edged lower to $1.5783.

For the week, the FTSE 100 Index fell 0.7%.

UK Construction Output Falls

Construction production in the United Kingdom decreased 2.3% on an annual basis in January, data released by the Office for National Statistics showed.

Total new construction works dropped 3.2% annually in January, with new housing works in the public sector falling 11.4%.

From a month ago, total construction output slumped 12.3% in January. New works and repair and maintenance works fell 13.1% and 10.7% respectively during the month.

UK Manufacturers'' Production, Orders Climb

UK manufacturers'' production and orders improved in the first quarter, the Engineering Employers Federation said.

The balance of manufacturers seeing output growth increased to 19% in the first quarter from 12% in the fourth quarter of 2011.

The orders balance improved to 7% in the first quarter from zero in the last quarter.

UK Industrial Output Drops; Factory Gate Inflation Rises

Industrial activity in the UK declined 0.4% from a month ago in January offsetting the 0.4% gain in December, the Office for National Statistics said.

The increase in manufacturing output eased to 0.1% in January from 1.1% in December.

Separately, output price inflation increased 4.1% in February compared to the 4% logged in January, data from the ONS showed.

British Inflation Expectations Ease

Britons'' inflation expectations for the year ahead eased to 3.5% in February from 4.1% in November, a survey by the Bank of England and GfK NOP showed today. The quarterly survey of public attitudes to inflation was undertaken in February 2012.

Gainers & Losers

Aggreko plc rose 2.4% to 2,279 pence after the temporary power and temperature control solutions provider stated fiscal year 2011 group revenue rose 14% to £1,396 million in 2011 from £1,230 million in 2010. Profit before tax for the year climbed 6% to £327 million from £307 million the year before.

Balfour Beatty Plc gained 0.6% to 285.60 pence after the infrastructure group said it has secured a £230 million PPP housing project with the U.S. Air Force.

London Stock Exchange Group Plc soared 7% to 961 pence after the bourse operator agreed to acquire a majority stake in swaps clearinghouse LCH.Clearnet Group Ltd. for €463 million or £386 million in cash.

Following the deal, London Stock Exchange Group will become the majority owner of LCH.Clearnet, holding up to 60% of its issued share capital.

Old Mutual Plc increased 0.51% to 163.40 pence after the financial services business stated fiscal year 2011 revenue fell 51% to £9.78 billion from £19.8 billion, as restated, in the comparable period.

Adjusted operating profit before tax rose 14% for the full year to £1.52 billion from £1.33 billion in 2010. The 2011 data is based on the Nordic unit being a discontinued business.

SABMiller Plc fell 0.7% to 2,599 pence after the brewing and bottling company said its Australian subsidiary, Foster''s Group Ltd., has been informed by Grupo Modelo S.A.B de C.V. that it intends to exercise a change of control provision terminating Foster''s license to import and distribute Corona Extra in Australia with immediate effect.