Libor Rate Scandal Widens to Regulators, Burberry Plunges 8%

Arthi Gupta
11 Jul, 2012
New York City

The UK indexes fell after economy remained flat in the June quarter. Burberry plunged despite a rise in quarterly revenues. Rolls-Royce won $280 million worth order from Avianca and Shell acquired remaining outstanding shares in Gasnor for $74 million.

[R]4:30 PM London – The UK indexes fell after economy remained flat in the June quarter. Burberry plunged despite a rise in quarterly revenues. Rolls-Royce won $280 million worth order from Avianca and Shell acquired remaining outstanding shares in Gasnor for $74 million.[/R]

The UK indexes edged lower tracking weak international markets and volatile commodities prices.

Spain proposed additional austerity measures to meet bailout conditions and Germany sold debt today at record low yields. Investors are also awaiting the release of Fed minutes of the latest meeting later in the day.

Spain''s Prime Minister Mariano Rajoy unveiled tax increases and spending cuts to reduce the budget deficit by €65 billion over two years.

In London, the benchmark index FTSE 100 declined 17.08 or 0.3% to 5,647.05 and the pound edged higher to $1.5563.

The British economy remained broadly flat in the June quarter, the latest monthly GDP estimates released by the National Institute of Economic and Social Research showed today.

The estimates showed that the economic output declined 0.2% in the three months ended June after rising 0.1% in the three months ended May.

The Libor scandal widened as more regulators and Barclays officials are asked to testify and at least eleven law suits have been filed in the U.S. Baltimore city, Charles Schwab and several hedge funds have filed claims in New York City.

Libor scandal is evolving and is likely to engulf several large banks and may turn out to be the costliest scandal on Wall Street and for the financial community in London.

Former head of Barclays shot back at UK lawmakers after some of them suggested that he lied to the inquiry committee and said that those allegations are “unfair and unfounded.”

Earlier, Diamond said that relations with regulatory agency FSA were cordial but a memo produced by former chairman Marcus Agius at his testimony showed that the regulatory agency had questioned Barclays’ culture and Diamond’s management practices as far back as 2010.

Gainers & Losers

Burberry Group plc plunged 7.6% to 1,187 pence after the luxury fashion house reported first quarter total revenue rose 11% to £408 million and retail revenue climbed 14% to £280 million on an underlying basis.

Centrica Plc fell 1.3% to 317.40 pence after a broker downgrade.

ICAP plc rose 1.1% to 314.60 pence after the interdealer broker said first quarter group revenue was 9% lower compared with the same quarter last year.

Rolls-Royce Holdings PLC slumped 2.8% to 865.50 pence after the engine maker won an order worth $280 million, at list prices, from Avianca S.A., the flag carrier airline of Colombia.

Royal Dutch Shell plc climbed 0.9% to $68.12 after the oil and gas explorer signed an agreement to acquire the remaining outstanding shares in Gasnor AS for $74 million.