UK Home Prices; Construction Decline

Arthi Gupta
02 Sep, 2010
New York City

The UK indexes dropped after the UK construction activity slowed and home prices fell in August. Tullow acquired 50% stake in Kenya and Ethiopia basins from Africa Oil Corp. European Central Bank left its rates at 1% and Sweden raised rate to 0.75%.

[R]4:15 PM London – The UK indexes dropped after the UK construction activity slowed and home prices fell in August. Tullow acquired 50% stake in Kenya and Ethiopia basins from Africa Oil Corp. European Central Bank left its rates at 1% and Sweden raised rate to 0.75%.[/R]

In London, FTSE 100 Index traded higher 13.45 or 0.25% to 5,378.91 and the pound edged lower to close at $1.5373.

The UK construction sector growth weakened for the third successive month in August reflecting weakness in housing construction, according to the latest survey report released by Markit Economics today.

The seasonally adjusted Markit/Chartered Institute of Purchasing and Supply construction purchasing managers'' index dropped to 52.1 in August from July''s reading of 54.1.

The UK home prices fell more than expected in August as the imbalance between supply and demand in the housing market increased, according to Nationwide.

Home prices fell 0.9% in August compared to the 0.5% decrease in July. The average price of a UK home is now just over £166,500. This marks the first time home prices dropped for two straight months since January - February last year.

On a year-over-year basis, home prices rose 3.9% in August compared to the 6.6% increase in July.

Tullow Oil plc, the oil and gas exploration and production company said it would acquire 50% stake in six adjacent licenses covering the East African Rift Basins of Kenya and Ethiopia from Canadian oil and gas company Africa Oil Corp. with a view to increase its asset base in East Africa.

Under the terms of the deal, Tullow will reimburse pro-rata past costs in each of these blocks and will carry Africa Oil for future net expenditures up to $23.75 million.

Vodafone Group Plc and Samsung Electronics Co. Ltd. announced the launch of the Samsung Galaxy Tab, which is powered by Android Operating System 2.2.

Gainers & Losers

Abbey Protection plc fell 1.54% to 80.00 pence after the specialist insurance and consultancy company reported first-half revenue rose 5.5% to £17.3 million, from £16.4 million last year. Profit before tax in the period increased 9.3% to £4.7 million from £4.3 million in the prior-year period.

AstraZeneca plc dropped 0.26% to $50.36 after the drug maker announced that the European Commission approved once-daily Seroquel Extended Release tablets as an add-on treatment of major depressive episodes in patients with Major Depressive Disorder, who have not responded well to antidepressant monotherapy.

BAE Systems Plc surged 3.48% to 312.50 pence after the defense contractor won a $629 million contract from the U.S. Mine Resistant Ambush Protected Joint Program Office to upgrade 1,700 military vehicles.

DSG international plc edged lower 0.35% to 25.27 pence after the electrical retailer in an update on trading for the 12 weeks ended July 24 announced that total group sales rose 3% in sterling and same store sales grew 3%. Total Internet sales increased 12%.

Hays Plc soared 5.11% to 98.80 pence after the recruitment group reported net profit for fiscal year 2010 plunged 91% to £9.3 million or 0.67 pence per share, compared to net profit of £105.8 million or 7.71 pence per share last year. Turnover in the full year climbed 9.8% to £2.69 billion from £2.45 billion last year.

Motive Television Plc surged 20.75% to 0.64 pence after the company engaged in the provision services to television broadcasters announced its Dublin-based TV production arm, Motive Television Ltd. won a new live sports production contract with Irish national commercial television broadcaster, TV3. The contract, worth €1.1 million, will commence immediately and run through to May 2012.

Pacific Horizon Investment Trust plc rose 1.03% to 147.50 pence after the investment trust said net return on ordinary activities before taxation for fiscal year 2010 surged 930% to £23.68 million from £2.30 million last year. On a per share basis, net earnings for the fiscal year were 30.01 pence compared to 2.17 pence in the previous year.

The Restaurant Group plc increased 2.47% to 249.00 pence after the company engaged in the operation of restaurants and pub restaurants said first-half revenue gained 9.2% to £229.49 million from £210.15 million in the previous year. Net profit for the first-half edged down 0.6% to £17 million or 8.53 pence per share compared to net profit of £17.1 million or 8.56 pence per share for the same period last year.

Xstrata Plc rose 0.32% to 1,092.00 pence after the diversified mining company announced that it has terminated its non-binding letter of intent with respect to a potential acquisition of Noranda Income Fund.