UK Public Sector Net Borrowing Rises, Stagecoach Surges 6%

Arthi Gupta
26 Jun, 2012
New York City

The UK indexes gained after public sector net borrowing rose in May. Irish factor gate inflation eased to six-month low in May. BP agreed to sell its interests in the Alba and Britannia fields to Mitsui for $280 million.

[R]2:30 PM London – The UK indexes gained after public sector net borrowing rose in May. Irish factor gate inflation eased to six-month low in May. BP agreed to sell its interests in the Alba and Britannia fields to Mitsui for $280 million.[/R]

The UK indexes advanced fractionally in a choppy trading as leaders of European Union prepare to gather and deepen fiscal and banking union across the region.

Leaders are expected to finalize the details of Greek and Spanish bailouts and also debate the nature and timetable to provide region wide bank guarantee and terms of future unwinding of banks and bailouts.

The Bank of England Governor Mervyn King told the Treasury Select Committee today that he is not averse for an interest rate cut to strengthen the economy. However, the economy remains weak as government embarks on austerity and support banks that are still averse to lend to small businesses.

In London, the benchmark index FTSE 100 gained 11.72 or 0.2% to 5,462.24 and the pound edged higher to $1.5604.

UK Public Sector Net Borrowing Rises

UK public sector net borrowing, excluding the temporary effects of financial interventions, increased to £17.9 billion in May from £15.2 billion a year ago, the Office for National Statistics said today.

Net debt at the end of May was £1,013.4 billion, equivalent to 65% of GDP.

Irish Factory Gate Inflation Eases

Ireland''s manufacturing output price index increased 2% annually in May, following the 2.8% gain in April, data released by the Central Statistics Office showed. The latest growth rate was the smallest since November 2011, when factory prices rose 1.9%.

Prices for export sales grew 2.1% annually, while prices for domestic sales gained 1.6% in May.

From a month ago, factory gate prices edged up 0.6% in May from the 0.5% fall in April, the agency said.

BP to Sell Alba, Britannia Interests

BP plc, the oil and gas explorer agreed to sell its interests in the Alba and Britannia fields in the UK North Sea to Mitsui & Co., Ltd. for $280 million in cash. The sale comprises BP’s non-operating 13.3% stake in Alba and 8.97% stake in Britannia.

Gainers & Losers

Petrofac Limited fell 0.9% to 1,345 pence after the oil and gas service provider said it is on course to deliver net profit growth in 2012 of at least 15%. ECOM order intake in the year to date totaled $1.3 billion.

Rolls-Royce Holding PLC rose 0.3% to 842 pence after the power systems and services provider was awarded a contract to supply two industrial Trent 60 gas turbines to power, Russian oil company, LUKOIL''s Stavrolen Power Plant in Budennovsk, Russia.

Stagecoach Group plc soared 5.6% to 263.90 pence after the public transport company reported fiscal year 2012 revenue increased 8.4% to £2.59 billion from £2.39 billion last year. Pre-tax profit for the year climbed 25.4% to £239.8 million from £191.2 million last year.

The Sage Group plc gained 0.3% to 266.40 pence after the accountancy software company completed its acquisition of the controlling interest in Folhamatic Group, a provider of accounting, tax and payroll and regulatory content software in Brazil.

The UK company is paying £125 million for a 75% stake in the firm, equating to an enterprise value for 100% of the business, including estimated net debt of £191 million.

WPP plc climbed 0.5% to 747 pence after the advertising and marketing company said its wholly-owned operating company Grey Group Germany has taken full control of Frey G2, a shopper marketing company in Germany.