UK Mortgage Lending Rises; Stocks Weak

Arthi Gupta, Mayank Mehta and Sanjay Barot
23 Jun, 2010
New York City

The UK indexes fall for the second consecutive day after weaker-than-expected U.S. new home sales data. Pound trades higher after the release of Bank of England minutes but the BoE policy makers differ over interest rate. UK banks approve more mortgages for home purchase in May.

[R]4:00 PM London – The UK indexes fall for the second consecutive day after weaker-than-expected U.S. new home sales data. Pound trades higher after the release of Bank of England minutes but the BoE policy makers differ over interest rate. UK banks approve more mortgages for home purchase in May.[/R]

In London FTSE 100 Index traded lower 58.72 or 1.12% to 5,188.26 and the pound edged higher to close at $1.491 and to close at €1.215. Imagination Technologies net profit surges and Kesa Electricals and Stagecoach Group quarterly sales rise.

The minutes of the Monetary Policy Committee meeting of the Bank of England showed today that seven members voted to hold the interest rate at a record low of 0.5%, while Andrew Sentance sought a 25 basis points hike. The meeting was held on June 9 and 10.

""Despite current uncertainties, for this member, it was appropriate to begin to withdraw gradually some of the exceptional monetary stimulus provided by the easing in policy in late 2008 and 2009,"" the minutes showed. ""Other members thought that changes to the balance of risks were insufficient to warrant a change in the stance of monetary policy.""

Policy makers unanimously decided to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion.

UK banks approved 36,709 mortgages for house purchase in May, an increase from 35,964 granted in April, the British Bankers'' Association said today.

The value of total mortgage approvals showed slight increase to £8.9 billion from £8.7 billion, with house purchase value rising to £5.4 billion from £5.3 billion.

The net mortgage lending value increased to £2.6 billion from £1.9 billion and gross mortgage lending rose to £9 billion from £8.3 billion.

UK retailers expect sales to pick up in July, partly because of the impact of the World Cup, according to a survey conducted by the Confederation of British Industry today. A balance of 11% expects sales volumes in July to be higher than a year ago and a net 8% of retailers still forecast sales to be poor for the time of year.

The survey found that the volume of orders placed on suppliers dropped in June, but a balance of 11% expect orders to rise next month. Further, a net 17% of retailers said that stock levels were more than adequate relative to expected demand, the highest balance since last April. A balance of 11% of retailers expects to have sufficient stocks in July.

BP plc is officially following through in changing leadership for its Gulf of Mexico operations in connection with handling the oil spill. Chief Executive Tony Hayward will be replaced with Robert Dudley.

Gainers & Losers

British Airways Plc fell 0.3% to 213.60.

Falkland Island Holdings plc rose 2.2% to 511.33 pence. The provider of international logistics and storage services provider said fiscal 2010 revenues fell 9.6% to £29.2 million from £32.3 million a year ago. Net profit for the year was £5.26 million or 57.5 pence per diluted share compared to net loss of £1.15 million or 12.8 pence per share a year ago.

Gulf Keystone Petroleum Limited, the oil and gas company rose 1.7% to 74.75 pence.

Imagination Technologies Group plc fell 1.8% to 294.00 pence. The chip maker said fiscal year 2010 revenues rose 26% to £80.9 million from £64.1 million a year ago. Net profit for the year rose 75% to £14.2 million or 5.6 pence per diluted share compared to net profit of £8.1 million or 3.5 pence per share a year ago.

International Personal Finance plc rose 4.9% to 230.10 pence.

Kesa Electricals plc rose 3.3% to 121.30 pence after the electrical retailing company said fiscal year 2010 revenues rose 3.4% to £5.12 billion from £4.95 billion a year ago. Net profit for the year was £40.7 million or 7.7 pence per diluted share compared to net loss of £111.4 million or 21.1 pence per share a year ago.

Primary Health Properties Plc, the healthcare property investor rose 1.9% to 289.00 pence.

Stagecoach Group plc rose 2.3% to 195.20 pence after the international public transportation company said fiscal 2010 revenues rose 5% to £2.2 billion from £2.1 billion a year ago. Net profit for the year fell 16% to £111.7 million or 14.9 pence per diluted share compared to net profit of £133.5 million or 18.5 pence per share a year ago.

SVG Capital plc, the private equity investor fell 2.9% to 137.40 pence.

The Rank Group Plc, the casino and bingo hall operator traded unchanged at 111.70 pence.

Whitbread Plc, the hotel and restaurant company fell 0.5% to 1,522.00 pence.