News Column

TOP NEWS: UK Trade Gap Unexpectedly Widens In June

August 8, 2014

Arvind Bhunjun



LONDON (Alliance News) - The following is a summary of top news stories Friday.

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COMPANIES

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TUI Travel PLC said strong and growing demand for its "unique" all-inclusive package holidays and long-haul destinations drove an increase in its operating profit in the third quarter of its financial year, and said in particular the Caribbean is a key growth opportunity for the group going forward. The travel operator, is in the process of merging with its German parent TUI AG. It said it continues to see strong trading in the UK and Germany, and stronger demand for its unique holidays, which are holidays available exclusively via TUI, and for bookings taken online. The travel group made an underlying operating profit of GBP112 million in the three months to June 30, up from GBP76 million a year earlier, helped by a GBP23 million boost from a later timing of Easter in 2014.

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The trial of a British investigator and his wife linked to GlaxoSmithKline PLC started in China in a case considered key in the ongoing bribery investigation into the British drugmaker, the Financial Times reports on Friday. Peter Humphrey and his wife, Yu Yingzeng, were detained over a year ago due to work they carried out for Glaxo, and are facing charges of illegally obtaining private information on Chinese citizens. The accusations carry a maximum sentence of three years in jail, the FT says. The newspaper also reports that Philip Hampton is leading the race to succeed Christopher Gent as the chairman of Glaxo.

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BP PLC has recalled its entire trucking fleet in Australia after an accident involving one of its fuel tankers resulted in the deaths of three people, the Wall Street Journal reports. A trailer attached to a BP fuel tanker became dislodged on Thursday while on a road near Wodonga in Victoria state. The trailer crossed onto the wrong side of the road and collided with two oncoming cars, killing two people and a child. BP said it will conduct an internal investigation into the cause of the accident and has recalled 42 trucks either owned or contracted by the company.

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Oil and gas explorer and producer Afren PLC said it had decided to temporarily suspend operations at the Barda Rash filed in the Kurdistan region of Iraq due to the heightened security tensions in the area, although it doesn't expect the move to have a significant impact on its cashflow. In a statement, the company said it is implementing a phased withdrawal of non-essential field personnel from the Barda Rash field, although its other operations in Kurdistan are unaffected. "Afren will continue to closely monitor events on the ground in consultation with our security team and the relevant authorities. It is expected that we will return to field operations as soon as it is prudent to do so," it said.

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CatlinGroup Ltd said its first-half pretax profit more than doubled, boosted by a significant jump in its net investment return as well as an improved underwriting performance. In a statement, the property/casualty insurer and reinsurer said it made a USD318.0 million pretax profit in the six months ended June 30, compared with USD145.0 million in the corresponding period last year. Catlin said that gross premiums written increased by USD361.0 million to USD3.66 billion, modestly inflated by foreign-exchange movements and an increase in the value of multiyear contracts written during the period in the London and Bermuda underwriting hubs. Catlin increased its interim dividend by 0.5 pence to 10.5p per share.

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House builder Bellway PLC said it's continuing to complete and sell more houses at higher average prices and its forward order book is also up, as the strong recovery in the UK housing market continues. In a trading update, the company said housing completions rose to 6,851 in the year to end-July, from 5,652 the previous year, and average selling prices were up to GBP213,000, from GBP193,025. Its forward order book is up to GBP924.3 million, from GBP679.5 million at the end of fiscal 2013, which the company said is a record. That represents 4,363 plots, up from 3,525.

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Japanese consulting firm Nippon Koei Co Ltd said it has made a recommended offer to buyHyder Consulting PLC for 680 pence a share in cash, or GBP268.1 million, a deal that trumps last month's GBP256.2 million takeover deal from Arcadis NV. UK design and engineering consultancy Hyder Consulting said it was no longer recommending the Arcadis bid, its board instead recommending that shareholders accept the higher offer from Nippon Koei. The companies said the offer from the Japanese firm is a 45% premium to Hyder Consulting's share price on July 30, a 5.4% premium to the closing price on Thursday, and a 4.6% premiuim to the 650 pence a share offer from Arcadis.

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MARKETS

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UK share prices are lower, with the FTSE 100 coming under significant selling pressure for the third consecutive day as rising geopolitical tensions continue to dominate the investment backdrop, boosting safe-haven assets and hurting equity values.

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FTSE 100: down 0.7% at 6541.81

FTSE 250: down 0.6% at 15151.79

AIM ALL-SHARE: down 0.5% at 746.75

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The pound slipped below USD1.68 for the first time in four weeks, reaching a low of USD1.6792 in early trade.

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GBP-USD: down at USD1.6801

EUR-USD: up at USD1.3393



GOLD: up at USD1317.19 per ounce

OIL (Brent): up at USD106.25 a barrel



(changes since end of previous GMT day)

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ECONOMICS AND GENERAL

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The UK visible trade deficit widened in June as the decline in exports of goods outpaced a fall in imports, the Office for National Statistics said. The visible trade deficit increased to GBP9.4 billion in June, from GBP9.2 billion in May, and it was larger than the expected shortfall of GBP8.9 billion. Reflecting decrease in demand for oil and manufactured goods, exports of goods dropped 1.6% in June from May to GBP23.5 billion. At the same time, imports fell only 0.4%, to GBP32.9 billion. The falls in both exports and imports of goods in June were attributed to a decrease in trade with countries outside of the EU.

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The Israeli army hit targets in the Gaza Strip in response to rocket attacks by Palestinian militants, after a three-day ceasefire ended and Egypt-mediated indirect talks failed to secure a longer truce. Israeli Prime Minister Benjamin Netanyahu ordered the military to respond "with force" to the renewed rocket attacks, Israeli media reported. Saraya al-Quds, the armed wing of Islamic Jihad, claimed responsibility for firing the rockets from Gaza into southern Israel after the ceasefire ended at 8 am local time. Earlier, Hamas said it was continuing its indirect negotiations with Israel although no agreement was reached on another truce, according to Sami Abu Zuhri, Hamas spokesman in Gaza.

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The Ebola outbreak in West Africa constitutes an international health emergency, the World Health Organization (WHO) said in Geneva and called for global action to stop the virus from spreading further. "This is the largest, most severe and the most complex outbreak in the nearly four decades history of this disease," WHO Director General Margaret Chan said. She added that declaring the Ebola epidemic a "Public Health Emergency of International Concern" does not mean that the WHO expects the virus to spread beyond West Africa, but that it wants countries around the world to raise their vigilance.

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US President Barack Obama late Thursday authorized airstrikes against Islamist militants that have taken over swathes of territory in Iraq and Syria, and said it could act to prevent a possible "act of genocide" against displaced minority communities. Further advances by the Islamic State (IS) group could threaten the city of Erbil, where there are US interests, Obama said. "I have therefore authorized targeted airstrikes" at the request of the Iraqi government, Obama said. The president stressed that no US ground troops would be involved in the operation.

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Russian Prime Minister Dmitry Medvedev announced Thursday that his government has decided to ban the imports of a wide range of agricultural and food products from the US and the EU in response to western sanctions imposed on Russia over its involvement in the conflict in Ukraine. Medvedev was quoted as saying on state television that the "full embargo" would cover the import of beef, pork, fruit and vegetable produce, poultry, fish, cheese, milk and dairy products from the EU, US, Australia, Canada and Norway.

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Job placements in the UK increased sharply in July, the Report on Jobs showed. Permanent job placements increased at the fastest rate in five months, and demand for temporary employees expanded at its biggest pace in seven months. The report is produced by Markit on behalf of the Recruitment & Employment Confederation and KPMG. In July, job vacancies continued to rise, especially in the private sector. Pubic sector vacancies also maintained a solid increase during the month.

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China posted a merchandise trade surplus of USD47.3 billion in July, the Customs Office said. That significantly topped forecasts for a surplus of USD26.0 billion following the USD31.56 billion surplus in June. Exports surged an annual 15%, also shattering expectations for a gain of 7.5% following the 7.2% increase in the previous month. Imports slid 1.6% on year versus forecasts for an increase of 3.0%. That follows the 5.5% spike a month earlier.

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Japan posted a current account deficit of JPY399.1 billion in June, the Ministry of Finance said - sliding into the red after four straight months of surplus. The headline figure missed forecasts for a shortfall of JPY325.7 billion, following the JPY522.8 billion surplus in May. The trade balance reflected a deficit of JPY537.1 billion, which beat expectations for a shortfall of JPY592.8 billion following the JPY675.9 billion deficit in the previous month. Exports were up 4.4% on year to JPY6.115 trillion, while imports spiked 14% to JPY6.652 trillion.

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The Bank of Japan kept its monetary policy unchanged at its August meeting, the central bank announced in a statement following the conclusion of its monetary policy meeting. The Bank decided to retain its policy of expanding monetary base at an annual rate of JPY60-70 trillion. The Bank also left its asset purchase policy unchanged. "Japan's economy has continued to recover moderately as a trend, though the subsequent decline in demand following the front-loaded increase prior to the consumption hike has been observed," the bank said. Japan's economy is expected to continue its moderate recovery trend, the BoJ said. The year-over-year rate of increase in the CPI is likely to be around 1.25% for some time.

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The Appellate Body of the World Trade Organization (WTO) ruled Thursday that China's export duties and quotas imposed on rare earths, as well as tungsten and molybdenum, are incompatible with China'sWTO obligations. Backing the claims of the EU and its co-complainants, the US and Japan, the WTO panel found China's export duties and quotas were not justified for reasons of environmental protection or conservation policy. The ruling clarified the sovereign right of a country over its natural resources does not allow it to control international markets or the global distribution of raw materials.

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US Secretary of State John Kerry arrived in Afghanistan Thursday for an unannounced visit as he seeks to end a feud between two presidential candidates about the winner of recent elections. Kerry's last visit came in mid July, when he spent dozens of hours brokering an agreement between the two candidates on an audit of the ballots. Kerry is to meet with presidential candidates Ashraf Ghani Ahmadzai - who was declared the winner of June 14 run-off with 56% of the vote - and Abdullah Abdullah, who has challenged the results as fraudulent.

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Argentina filed a plea with the International Court of Justice (ICJ) on Thursday seeking relief in a long-running dispute over debt repayment. The issue is decisions made by US courts relating to the restructuring of the Argentine sovereign debt, the ICJ court said. "(Argentina) contends that the US of America has committed violations of Argentine sovereignty and immunities and other related violations as a result of judicial decisions adopted by US tribunals concerning the restructuring of the Argentine public debt," the ICJ said.

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