UK Home Prices Drop, BG Sells Comgas Stake for $1.8 Billion

Arthi Gupta
03 May, 2012
New York City

The UK indexes advanced and the economic growth outlook was cut for the current year. The UK home prices fell unexpectedly and service sector activity eased in April. BG Group signed a memorandum of understanding to sell Comg

[R]3:05 PM London – The UK indexes advanced and the economic growth outlook was cut for the current year. The UK home prices fell unexpectedly and service sector activity eased in April. BG Group signed a memorandum of understanding to sell Comgás stake for $1.8 billion.[/R]

The UK indexes climbed in cautious trading after home prices dropped for the second straight month and Irish service sector rose for a third successive month in April.

The Confederation of British Industry lowered economic growth outlook for this year.

In London, the benchmark index FTSE 100 gained 6.28 or 0.2% to 5,764.81 and the pound edged lower to $1.6175.

UK Growth Outlook Lowered

The UK economy is expected to expand 0.6% in 2012, instead of the 0.9% growth estimated in February, the Confederation of British Industry said in its quarterly economic forecast. For 2013, growth is seen at 2%.

UK Home Prices Fall, Service Sector Activity Eases

UK home prices fell unexpectedly in April from the prior month, data published by Nationwide Building Society showed today.

The price of a typical house fell 0.2% on a monthly basis in April, following a 1% drop in March.

On a yearly basis, home prices dropped 0.9% in April, the same rate of fall as seen in March.

Separately, the UK''s service sector growth slowed in April, a survey by Markit Economics showed.

The headline Markit/Chartered Institute of Purchasing & Supply business activity index eased to 53.3 in April from 55.3 in March. This was the lowest reading since November last year.

Irish Service Sector Activity Improves

Irish service sector rose for a third successive month in April, according to a survey by Markit Economics.

The seasonally adjusted business activity index edged higher to 52.2 in April compared to 52.1 in March.

BG Group Signs MoU with Cosan

BG Group signed a memorandum of understanding with Cosan S.A. Indústria e Comércio for the sale of its 60.1% holding in Comgás, Brazil’s largest gas distribution company, for approximately $1.8 billion.

BG Group has a 60.1% stake in Comgás and Shell holds 18.1% and the remainder is held by investors listed on the Sap Paolo Stock Exchange.

Gainers & Losers

Antofagasta plc slumped 4% to 1,113 pence after the Chile-based miner reported first quarter copper production rose 25.5% from a year ago to 162,900 tons.

Diageo plc rose 1.6% to 1,615 pence after the alcoholic beverages company said in the third quarter it delivered 6% organic net sales growth with 3% organic volume growth.

Legal & General Group Plc declined 2.7% to 118.50 pence after the insurer said first quarter sales climbed 0.2% to £434 million compared with £433 million in the same period a year earlier.

Smith & Nephew plc surged 4.2% to 631 pence after the medical instruments maker reported first quarter revenue on an underlying basis grew 3% to $1.08 billion. Trading profit was $252 million, up 5% on an underlying basis.

Net income in the quarter rose 2.2% to $233 million or $0.179 per share from $228 million or $0.174 per share in the same quarter last year.