UK GDP Growth Lowered, Aviva Sells US Business for $1.8 B

Arthi Gupta
21 Dec, 2012
New York City

The UK indexes fell after gross domestic product increased but current account deficit narrowed in the third quarter. UK consumer confidence declined in December. Aviva agreed to sell Aviva USA to Athene for $1.8 billion.

[R]4:00 PM London – The UK indexes fell after gross domestic product increased but current account deficit narrowed in the third quarter. UK consumer confidence declined in December. Aviva agreed to sell Aviva USA to Athene for $1.8 billion.[/R]

Stocks in London traded lower and resource sector stocks led the decliners. Asian markets closed sharply lower after U.S. lawmakers failed to agree on a plan to lower spending and increase taxes.

Markets in Asia dropped as much as 1% and European market indexes dropped more than 0.7% on the growing worries that the U.S. lawmakers may not be able to avert a budget crisis and that may increase the chance of recession.

In London, the benchmark index FTSE 100 declined 17.16 or 0.3% to 5,941.10 and the pound edged lower to $1.6204.

For the week, the FTSE 100 rose 0.3%.

UK Economy Expands

The UK gross domestic product growth was lowered to 0.9% in the third quarter, revised from the previously estimated increase of 1%, final data from the Office for National Statistics showed today.

Output of the production industries rose 0.7%, revised down from the previously estimated 0.9% increase. Manufacturing output rose 0.7%, revised down from the previously estimated increase of 0.9%.

Separately, business investment in the UK was estimated to have increased by £1.1 billion or 3.8% to £31.5 billion when compared with the previous quarter. Business investment increased by £1.5 billion or 5.1% when compared with Q3 2011.

UK Current Account Deficit Narrows

The United Kingdom’s current account deficit narrowed to £12.8 billion in the third quarter from a revised deficit of £17.4 billion in the previous quarter. The deficit in the third quarter equated to 3.3% of GDP at current market prices.

The trade deficit narrowed to £8.3 billion in the third quarter from £11 billion in the previous quarter.

The income balance swung to a surplus of £1.2 billion in the third quarter from a deficit of £1 billion in the second quarter of 2012.

In another report, public sector net borrowing in the UK was £17.5 billion in November; this is £1.2 billion higher net borrowing than in November 2011, when net borrowing was £16.3 billion.

For the April to November period, public sector net borrowing was £92.7 billion; this is £8.3 billion higher net borrowing than in the same period the previous year, when net borrowing was £84.4 billion.

UK Service Index Up

The seasonally adjusted Index of Services for the UK was estimated to have increased 2% in October 2012 compared with October 2011.

All four service sector components were estimated to have increased in the most recent month compared with the same month a year ago.

UK Consumer Confidence Wanes

UK consumer confidence declined in December, according to the survey from research group GfK.

The overall index scores decreased seven points to -29 in December. Four of the five measures decreased this month, with the remaining measure remaining the same. The annual moving average stays the same at -29.

The Index measuring changes in personal finances during the last twelve months decreased one point this month to -22; this is one point higher than December 2011.

Aviva to Sell Aviva USA

Aviva plc agreed to sell its US life and annuities business and related asset management operations to Athene Holding Ltd for $1.8 billion or £1.1 billion.

Aviva will retain the North American asset management activities of Aviva Investors that are focused on third parties, and Aviva plc assets outside of the USA.

Gainers & Losers

BAE Systems plc fell 1.2% to 343.80 pence after the defense contractor confirmed that the Sultanate of Oman decided to purchase 12 Typhoon and eight Hawk Advanced Jet Trainer aircraft.

Land Securities Group PLC declined 0.6% to 819 pence after the real estate investment trust is set for an acquisition of 100% interests in X-Leisure Limited.

WPP plc climbed 0.1% to 893 pence after the advertising company said that its wholly-owned operating company Wunderman acquired a majority stake in CM Interactive S.A., a digital marketing agency based in Mexico.

Xstrata plc gained 0.4% to 1,047.50 pence after the metals and mining company said Xstrata Zinc plans to increase ore production by 33% to 1.6 million tons per annum at its high-grade Lady Loretta mine in north-west Queensland, Australia.