TAX NEWS - June 2010

U.K. Tax: U.K. Stocks Advance as Miners Boosted by Report on Tax Changes

June 10 (Bloomberg) -- U.K. stocks rose, led by basic- resources companies, after the Australian Herald Sun reported Prime Minister Kevin Rudd will announce "major changes" to a proposed mining tax.

BHP Billiton and Rio Tinto led raw-material shares higher after the report and as the Chinese customs bureau said the country's exports soared in May. ARM Holdings Plc advanced 5.9 percent amid speculation Apple Inc. may try to buy it. BP dropped 6.7 percent as President Barack Obama and lawmakers stepped up their rhetoric against the company as it battles to stop the worst oil spill in U.S. history.

The FTSE 100 Index advanced 46.64, or 0.9 percent, to 5,132.5, after earlier dropping as much as 1.1 percent. The FTSE All-Share Index gained 0.8 percent and Ireland's ISEQ Index added 1.4 percent.

"The reported dilution of Australian tax hikes on the miners, along with an extraordinary set of Chinese export figures, have combined to shift the spotlight away from the problems in Europe, at least for the moment," said Richard Hunter, the head of U.K. equities at Hargreaves Lansdown Stockbrokers in London. "Any indications that the global recovery will not be derailed will be warmly received."

The FTSE remains 46 percent higher than in March 2009 amid signs the global economy is recovering. Still, equities have fallen 12 percent from this year's high on April 15 on concern that Europe's debt crisis will hurt the economic recovery and as BP lost more than a third of its value following the oil spill.

The Bank of England kept its bond-stimulus program in place and left its benchmark interest rate at a record low to aid the economy as Prime Minister David Cameron prepares the biggest budget cuts since at least the early 1980s.


China's Economy

BHP Billiton gained 3.2 percent to 1,875.5 pence. Rio Tinto climbed 3.7 percent to 3,262 pence. The Herald Sun said the Australian government will announce shortly changes to the proposed tax of resource companies.

ARM Holdings rose 5.9 percent to 290.1 pence as traders cited speculation that Apple Inc. may be looking to buy the U.K. chip designer. The shares earlier soared as much as 32 percent.

"I've just heard the usual bid rumours about Apple," said Bill Ismail, a senior sales trader at City Index Ltd. in London. "I've not heard anything else about price" of any possible bid.


Cost of Spill

BP, which comprises more than 5 percent of the benchmark FTSE 100 Index, sank 6.7 percent to 365.5 pence, its lowest price since January 2003. Ian MacDonald, an oceanographer at Florida State University in Tallahassee estimated the well is leaking 26,500 barrels to 30,000 barrels a day into the Gulf of Mexico, six times more than the figure used by BP and the government from April 28 to May 27.

"We recognize that there is little certainty or definition around the costs of the spill to BP's shareholders," Mark C. Fletcher, a London-based analyst at Citigroup wrote in a report to clients today. "The market is now discounting the worst case rather than the most likely outcome." Citigroup today reiterated its recommendation to buy the shares as it cut its price estimate on the stock to 590 pence from 730 pence.

Home Retail Group Plc declined 4.1 percent to 228.3 pence after saying sales at Argos outlets open at least a year fell 8.1 percent in the first quarter. Revenue at the Homebase chain declined 1.4 percent on the same basis.