UK Indexes Climb; Home Prices Fall

Arthi Gupta
29 Jul, 2010
New York City

The UK indexes rise on strong earnings. The UK home prices fall in July, mortgage approvals decline and M4 money supply flat in June. UK government asks corporations to abolish fixed retirement age plan as of 2011.

[R]4:30 PM London – The UK indexes rise on strong earnings. The UK home prices fall in July, mortgage approvals decline and M4 money supply flat in June. UK government asks corporations to abolish fixed retirement age plan as of 2011.[/R]

Irish average national home prices fall in the second quarter. BP agrees to pay $60 million in advance payments for cleanup cost in August.

In London, FTSE 100 Index traded lower 2.42 or 0.05% to 5,317.26 and the pound edged higher to close at $1.5610.

British home prices dropped in July for the first time since February as tight credit conditions and uncertainty over the future economic situation restricted potential home buyers.

Home prices declined 0.5% month-on-month in July after a flat reading in June, according to a report from the Nationwide Building Society published today.

The average cost of a home declined £169,347 in July from £170,111 in June.

The number of loans approved for home purchases in the UK in June decreased to 47,643 from 49,461 in May, according to a report released by the Bank of England today.

However, total net lending to individuals rose £0.6 billion in June. Year-on-year, secured lending grew 0.9%.

Consumer credit fell £0.1 billion in June compared to £0.3 billion increase in May. On a yearly basis, credit dipped 0.1%.

The Bank of England today confirmed that the M4 money supply was flat on a monthly basis in June. It followed a 0.1% decline in May. On an annual basis, money supply grew 3% following May''s 2.7% rise.

The household sector''s holdings of M4 rose £1.3 billion in June. Holdings of M4 by other financial corporations fell £3.4 billion and M4 lending, excluding the effects of securitizations to OFCs fell £0.5 billion in June.

The British government is planning to phase out the country''s fixed retirement age system by October 2011. The plan restricts an employer from dismissing a staff at reaching the age of 65.

The government said this measure is one of the steps it is taking to help and encourage people to work for longer against the backdrop of demographic change. Employers are asked not to issue any notifications for compulsory retirement using the default retirement age procedure starting from April 6, 2011.

Irish average national home prices declined at a slower pace in the second quarter. Home prices in Ireland dropped 1.7% on a sequential basis in the second quarter, according to a report by the permanent tsb/ESRI House Price Index released today. This was the lowest quarterly reduction since the second Quarter of 2008.

On an annual basis, average national house prices dropped 17% in the second quarter, compared to a 18.9% fall in the previous quarter.

In the second quarter, the average price for a house in Ireland was €201,364, compared with €242,593 last year.

BP estimates it will pay at least $60 million in advance payments in August to claimants across the Gulf Coast who have lost income or net profit due to the oil spill in the Gulf of Mexico. The company will start making the advance payments by the end of this week and claimants will receive their check about 30 days after they received their July payment.

To date, BP paid more than $237 million to individuals and businesses for loss of income or net profits since May.

Gainers & Losers

AstraZeneca Plc fell 0.47% to 51.27 pence after the drug maker doubled its share repurchase target to $2 billion and announced the U.S. endorsement of its investigational blood clot treatment drug Brilinta.

BAE Systems Plc gained 1.17% to 320.80 pence after the defense and aerospace company reported a profit for the six months ended June 30, 2010, driven by lower impairment charges, a reduction in financial expense and revenue growth.

First-half revenue was £10.16 billion, up from £9.09 billion in the same period last year. Profit from continuing operations was £571 million or 16.1 pence per share compared to a loss of £63 million or 2.1 pence per share in the prior-year period.

British Sky Broadcasting Group Plc declined 1.18% to 711.50 pence after the company reported quarterly revenues totaled £1.53 billion, higher than the previous year''s revenue of £1.36 billion.

Royal Dutch Shell Plc fell 0.16% to 55.82 pence after the oil and gas explorer reported second quarter net profits rose 15% to $4.39 from $3.82 billion a year earlier.