FTSE Gains 1.7%; Home Prices Fall

Arthi Gupta
20 Sep, 2010
New York City

The UK indexes advanced after home prices fell 1.1% in September. The UK mortgage lending weakened in July and M4 money supply declined in August. BAE Systems agreed to buy L-1 Identity Solutions Intelligence Services Group for $295.8 million.

[R]4:15 PM London – The UK indexes advanced after home prices fell 1.1% in September. The UK mortgage lending weakened in July and M4 money supply declined in August. BAE Systems agreed to buy L-1 Identity Solutions''s Intelligence Services Group for $295.8 million.[/R]

Stocks in London trading surged on the back of rising optimism. The BoE in its latest report noted despite the fall in rates lending to household has not increased. The Central Bank of Ireland Governor Honohan noted bank liabilities manageable. UK home prices fell.

In London, FTSE 100 Index surged 94.09 or 1.70% to 5,602.69 and the pound edged lower to close at $1.5621.

The Bank of England in its Quarterly Bulletin released today said that during the recent financial crisis, the bank rate reduced sharply, but new lending rates to households decreased by a much smaller amount. The central bank noted this may reflect a need to build higher capital levels within the banking sector.

Further, the BoE noted that the effective exchange rate of sterling increased around 5.6% over the last three months. According to BoE, the improvement in the exchange rate was largely due to the reduced uncertainty about the fiscal outlook of the UK.

The average asking price for a home in the United Kingdom dropped 1.1% in September compared to the 1.7% decline in August, property tracking Web site Rightmove said today. The average price of a home was now just under £229,800. On an annual basis, home prices rose 2.6% compared to a 4.3% gain in August.

The UK mortgage lending continued to slow in July, according to the Bank of England''s latest Trends in Lending publication. Net lending to businesses also remained negative.

In addition, the network of agents noted that while credit conditions were easing for larger businesses, they remained tight for smaller firms.

The UK M4 money supply decreased by a seasonally adjusted £4.1 billion or 0.2% in August from the previous month, according to provisional data from the Bank of England released today. The twelve-month growth rate eased to 1.8% in August from 2.3% in July.

The M4 lending excluding the effects of securitizations declined £18 billion or 0.7% in August. On an annual comparison, it dropped 0.5% in August compared to an increase of 0.5% in July.

The Central Bank of Ireland Governor Patrick Honohan said today that Ireland''s cost of extensive guarantee of bank liabilities is manageable from the point of view of the national public finances.

According to Honohan, also a European Central Bank Governing Council member, """"""""Some explicit reprogramming of the budgetary profile for the coming years is clearly necessary soon if debt dynamics are to be convincingly convergent.""""""""

BAE Systems plc agreed to acquire L-1 Identity Solutions Inc.''s Intelligence Services Group, comprising of SpecTal LLC, Advanced Concepts Inc., and McClendon LLC for a cash consideration of $295.83 million in the aggregate.

After the sale to BAE Systems, L-1 Identity will be comprised of Secure Credentialing Solutions, Biometric and Enterprise Access Solutions and Enrollment Services.

HSBC Holdings Plc. entered into an asset purchase agreement to sell the physical assets of its wholesale banknotes business in Asia to United Overseas Bank Limited for a total consideration of $15 million in cash.

As part of the deal, HSBC will also license to United Overseas Bank the technology system used in connection with its Asian wholesale banknotes business. HSBC will work with UOB to facilitate the signing of new contracts between UOB and customers and staff of HSBC''s Asian banknotes business. The transaction is expected to complete in the fourth quarter of 2010.

BP plc announced on Sunday the completion of the """"""""Bottom Kill"""""""" procedure to permanently seal the blown-out Macondo oil well in the Gulf of Mexico. The company confirmed that both the casing and annulus of the well were sealed by cement pumped through the relief well, and it will now go ahead to complete the abandonment of the well.

Gainers & Losers

Allied Irish Banks, plc dropped 0.59% to $1.69 after the bank that conducts retail and commercial banking business in Ireland signed an agreement to sell its entire shareholding in Goodbody Holdings Limited and associated companies, including Goodbody Stockbrokers, to Fexco Holdings Limited for a cash consideration of about €24 million.

Amino Technologies plc gained 2.63% to 45.67 pence after the specialist in Internet Protocol Television software technologies and hardware platforms said Stuart Darling is to step down from the board and from his position as Chief Financial Officer and Senior Vice President of Operations.

CEPS plc plunged 12.28% to 25.00 pence after the industrial holding company reported first-half revenue improved 5.6% to £7.92 million from £7.50 million in the comparable period. Profit for the period declined 45.2% to £122,000 or 0.61 pence per share versus profit of £223,000 or 2.14 pence per share a year ago.

Corero plc surged 8.15% to 36.23 pence after the developer and seller of computer software said first-half revenue increased 1.4% to £2.21 million from £2.18 million in the comparable period. Profit generated in the period was £21,000 or 1.38 pence per share versus a loss of £442,000 or 29.1 pence per share a year ago.

Lipoxen Plc declined 1.07% to 7.42 pence after the biopharmaceutical company stated first-half revenue dropped 82% to £76 thousands from £411 thousands in the prior-year period. Loss in the period widened 7.7% to £1.54 million, compared to a loss of £1.43 million last year. Loss per share narrowed to 0.94 pence from 1.14 pence a year ago.

Lloyds Banking Group Plc rose 2.12% to 76.94 pence after the financial services firm announced that its Group Chief Executive, Eric Daniels, plans to retire in a year''s time. Eric has agreed to continue as Group Chief Executive until the search process is successfully completed.

Max Petroleum Plc slumped 16.36% to 11.50 pence after the oil and gas explorer and developer said it completed drilling the KAW-1 exploration well on the Karsak West prospect on Block E.

The well reached a total depth of 1,858 meters after encountering only minor hydrocarbon shows and will be plugged and abandoned. The Sun ZJ-30 drilling rig will currently move to drill the UTS-1 exploration well on Uytas prospect on Block A, Max Petroleum noted.

Ovoca Gold plc soared 9.62% to €0.26 after the gold exploration and mine developer agreed to sell its wholly owned subsidiary Norplat Limited to privately held Grangesberg Iron Ore Plc for $1.25 million in cash. Norplat Limited has a 95% interest in the Oleninskoye gold project and the Pellapakh copper-molybdenum project in the Murmansk Region of Russia.

Oxus Gold plc fell 2.73% to 6.42 pence after the company engaged in mining and production of gold and other precious metals stated first-half revenue rose 29% to $4.11 million from $3.19 million in the comparable period. Loss for the period narrowed 47.4% to $2.72 million or 0.70 cents per share compared with a loss of $5.18 million or 1.35 cents per share a year ago.