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Weekly Review

Date: Friday 17 Aug 2012

The FTSE 100 closed up five points on the week at 5,852 points.

Equity view

BP's grand garage sale continues with the integrated oil giant announcing the sale of its Sunray and Hemphill gas processing plants in Texas. BP is also selling its refinery in Carson, California.

Anglo-Swedish drugs colossus AstraZeneca has raised earnings guidance a tad after signing a deal with US pharmaceuticals titan Pfizer. Astra's core earnings per share (EPS) target for 2012 has been increased to the range of $6.00 to $6.30.

Life assurance behemoth Standard Life saw profits rise in the first half after a strong performance in the UK, its biggest market. Operating profit before tax was up 15% to £302m with the firm reporting group assets under administration (AUA) of £204.2bn, up 3% from £198.4bn the year before.

Poor weather and tough economic conditions in Europe saw earnings slip at building materials group CRH in the first half of the year. Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 1% year-on-year from €574m to €568m in the six months to June 30th, more or less in line with the company's guidance in May of "close to last year's level".

Russian steel giant Evraz said workers have stopped striking at its Highveld Steel and Vanadium operations in South Africa, and production has been resumed.

Standard Chartered has reached a $340m settlement with the New York Department of Financial Services (DFS) over claims its US subsidiary illegally processed payments for Iran.

UK banking group Lloyds is intending to sell its interest in a portfolio of private equity-related investments worth over a billion pounds which made a loss last year.

Diversified mining giant Eurasian Natural Resources Corp (ENRC) was hit by a fall in commodity prices and challenging economic conditions in the first half, meaning that both revenues and profits were significantly lower than the same period in 2011.

The holding company of African Barrick Gold (ABG) is in talks with China National Gold Group about the possibility of selling its stake in the London-listed miner to China's largest gold producer.

Riot police have shot dead dozens of miners at Lonmin's Marikana platinum project in South Africa, as a week of protests over pay have turned the FTSE 250 group's mine into a warzone.

Economic news

Figures from the Council of Mortgage Lenders showed that gross lending totalled £11.7bn in June, 6% lower than May's total of £12.5bn and 7% lower than in last June.

The UK Consumer Prices Index (CPI) rose at an annual rate of 2.6% in July, wrong-footing experts who had forecast a fall to 2.3%. The wider Retail Prices Index (RPI) rose 3.2%, up from 2.8% in June.

The UK unemployment rate fell a bit more than expected in July, although the number of people seeking full-time employment who are working part-time instead hit a new high.

The Bank of England's Monetary Policy Committee (MPC) voted unanimously in favour of keeping the central bank's key interest rate at its record low, but more quantitative easing later this year should not be ruled out.

Retail sales volumes rose by 0.3% from June and by 2.8% on an annual basis, according to the latest data from the Office for National Statistics (ONS). The market consensus was looking for a change of -0.1% and 1.4%, respectively.

International events

Internet giant Google is planning on eliminating around 4,000 jobs at its Motorola Mobility Holdings unit, equivalent to 20% of the company it acquired last year for about $12.5bn.

Belgian central bank governor Luc Coene said that zero economic growth would translate to a deficit of slightly more than 3% of gross domestic product (GDP) in 2012, above the initial target of 2.8%.

RWE reported mixed earnings for the first semester and announced plans to cut 2,400 jobs as sales growth lagged its rival E.On.

Output across the countries using the Euro fell during the second quarter of 2012, following on from the previous three months when it registered zero growth. Eurozone GDP fell by 0.2% compared with the previous quarter, according to the 'flash' estimate from Eurostat, the statistical office of the European Union.

Wal-Mart, the world's largest retailer, hit earnings forecasts in its second quarter but missed on revenue. The firm also nudged its full-year earnings forecast higher but that too came up short of analysts' estimates.

US weekly unemployment claims rose by 2,000 to 366,000 last week according to the data released by the US Labor Department on Thursday. The jobless claims number did not stray far from the 365,000 expected by the market consensus.

German Chancellor Angela Merkel threw her weight behind the proposal by European Central Bank President Mario Draghi to buy sovereign peripheral bonds in order to bring down yields in indebted countries such as Spain and Italy. She said that Draghi's pledge to do "whatever it takes to preserve the euro" was "completely in line" with the views of euro-area officials.

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