Sterling weakened broadly, retreating from its 26-year high against the greenback on heavy selling pressure. Trading as high as $2.0654, cable declined the most against the dollar in more then six weeks as slumping equity markets prompted traders to curtail their risk profiles and unwind carry-trade positions.
[B][U]UK Headlines:[/U][/B]
[B][I]Brown Unveils Tougher Security Laws[/I][/B]
Gordon Brown unveiled tougher counter terrorism laws on Wednesday which promised tighter border controls and resurrected proposals that have irked Muslims and divided MPs across the political divide. He said the new measures were needed as Britain faced a threat from 30 known plots while 200 militant cells, many linked to al Qaeda, were being monitored.
Brown unveils tougher security laws | Reuters
[I]-Source: Reuters UK[/I]
[B][I]Resolution to Buy Friends Provident for $8.7 Billion[/I][/B]
Resolution Plc plans to buy Friends Provident Plc for about 4.2 billion pounds ($8.7 billion) of stock in the biggest U.K. life-insurance acquisition since 2000. Shareholders of Resolution will own 50.9 percent of the combined company, to be renamed Friends Financial Group Plc, London-based Resolution said in a statement today. The new company will be led by Resolution Chairman Clive Cowdery, former head of General Electric Co’s European insurance unit, and have about 165 billion pounds of funds under management.
Bloomberg - Are you a robot?
[I]-Source: Bloomberg[/I]
[B][I]Barclays? Share Clawback Falters[/I][/B]
Barclays shareholders have failed to take up the full amount of stock being offered to them under the clawback arrangement the bank announced on Monday when it agreed to issue €13.4bn of new shares to China Development Bank and Temasek Holdings as part of its increased offer for ABN Amro.
Subscribe to read | Financial Times
[I]-Source: Financial Times[/I]
[B][/B]
[B][U]UK Market Activity:[/U][/B]
[I][U]Currency Markets:[/U][/I] [B]GBP[/B]
Sterling weakened broadly, retreating from its 26-year high against the greenback on heavy selling pressure. Trading as high as $2.0654, cable declined the most against the dollar in more then six weeks as slumping equity markets prompted traders to curtail their risk profiles and unwind carry-trade positions. The stalling rally was not limited to trading in the dollar however. The pound was down 0.5 percent making a two week low versus the yen at Y246.30 signaling that risk-aversion might have been the culprit for the pull-back. Some analysts contend that sterling?s retracement has less to do with flight-to-quality then publicized. Up 3.2 percent against the buck in July, followers of the British currency call the rally “overextended” with the pound hitting the key $2.0650 resistance suggesting to some that a pull-back was overdue.
[I][U]Equity Markets:[/U][/I] [B]FTSE 100[/B]
UK equities traded lower on a choppy session erasing prior gains as the British countryside remains submerged in the worst flood in 60 years. London?s benchmark FTSE 100 Index reached the bell down 0.7 percent to 6454.30 paced by shares in Home Retail Group and Whitbread Plc. Dampening analyst commentary was enough to send the owner of over 1,000 UK stores spiraling as shares in Home Retail Group dipped 2.9 percent before closing at 414.75 pence. Traders eagerly await readings on the UK housing sector due out tomorrow speculating further cooling as Rightmove House Prices disappointed investors earlier in the week.
[I][U]Fixed-Income Markets: [/U][/I][B]10-Year Long Gilt[/B]
Declining 2 basis points to 5.287 percent, UK long gilt yields move inversely to US Treasury yields, which are currently up 1 basis point and fetching 4.921 percent. The divergent performance in the usually tightly correlated government debt market is indicative of a higher bout of risk-averse investing in the UK as skittish investors shift funds from equities and FX to fixed-income instruments. The unwinding of carry-trades is the reason some analyst are giving for the buying pressure in long debt as the pound is a prime recipient currency for such positions yielding the highest rate in the G7.
