British Airways owner gains on BMI deal
Markets posted strong gains today as commodity prices lifted energy companies and miners. The FTSE 100 quickly rose more than 1%, a level that it maintained for the rest of the day.
Investors learnt that International Airlines Group (IAG), the owner of British Airways, has bought British Midland International (BMI) from the German airline Lufthansa for a sum of 172.5 million. Whilst BMI is loss making, the deal will bring the rights to more than 50 new landing slots at Heathrow airport, one of the worlds busiest. The cost to IAG was, according to some analysts, slightly higher than they expected, possibly because of interest in BMI from Virgin. Still the deal saw IAG one of the best performers on the FTSE 100 with its 3.3% gain to finish at 149.9p.
Domestic data suggested that the UK economy grew at a faster rate than previous estimates in the third quarter of this year, with the Office for National Statistics upgrading its quarter on quarter growth figure from 0.5% to 0.6%. The revision came as the 0.1% figure for the second quarter was revised lower to 0%, with neither update being sufficient to alter the current consensus that the eurozone crisis will adversely affect future economic growth.
In a similar revision, but not necessarily of the same outcome, growth in the US was guided lower for their third quarter, down to 1.8% from its previous annual estimation of 2.0%. This was largely a result of a smaller gain in consumer spending which accounts for 70% of the US economy. Markets were barely perturbed by the downgrade, even before a Michigan Consumer Sentiment Index rose more than expected. At the time of writing US indices were trading between 0.2%-0.6% higher.
The FTSE maintained its level and closed 1.3% higher at 5457, a 67 point gain for the day and in line with European indices.
This was posted in Bdaily's Members' News section by John Dance .
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