UK Mortgage Approvals Fall; Stocks Higher

Arthi Gupta
29 Sep, 2010
New York City

The UK indexes pared gains after mortgage approvals fell in August. The UK productivity growth rose in the second quarter, services output improved in July, and gross mortgage lending remained flat in the month. British Airways agreed to launch transatlantic joint business with AA and Iberia.

[R]4:30 PM London – The UK indexes pared gains after mortgage approvals fell in August. The UK productivity growth rose in the second quarter, services output improved in July, and gross mortgage lending remained flat in the month. British Airways agreed to launch transatlantic joint business with AA and Iberia.[/R]

The UK M4 money supply growth revised up for August.

In London trading, FTSE 100 Index fell 27.27 or 0.47% to 5,551.09 and the pound edged higher to close at $1.5807.

The Bank of England policy maker Adam Posen said on Tuesday that more monetary stimulus is needed to support economic recovery.

In a speech to the Hull and Humber Chamber of Commerce, Posen said, ""The case I wish to make is that monetary policy should continue to be aggressive about promoting recovery, and, subject to further debate, I think further easing should be undertaken.""

According to Posen, the major risks facing the economy are that of sustained low growth turning into a self-fulfilling prophecy and/or inducing a political reaction that could undermine long-run stability and prosperity.

The number of mortgages approved for home purchase in the UK fell to 47,372 in August from 48,346 in July, the Bank of England said today.

Total net lending to individuals rose £1.5 billion in August, compared to the £0.2 billion increase in July. The twelve-month growth rate increased to 0.9% from 0.8%. The annual growth remained unchanged at 1%.

Consumer credit showed a net repayment of £0.1 billion in August, as against the July increase of £0.2 billion. The annual growth rate of consumer credit remained at 0.2%.

Productivity across the UK economy, measured by output per worker, increased 1.4% on an annual basis in the second quarter compared to 1.1% growth in the first quarter, the Office for National Statistics said today.

Hourly productivity across the whole economy also increased 1.4% annually in the second quarter from a growth of 0.9% in the previous quarter.

The UK gross mortgage lending by building societies in August was broadly unchanged from July, the Building Societies Association said on Tuesday. Gross mortgage lending was £1.97 billion in August compared with £1.99 billion in July, the highest monthly lending in the year.

On a seasonally adjusted basis, gross lending was £1.85 billion in August, higher than £1.75 billion in July.

Mortgage approvals by societies in August were £1.78 billion compared to £1.94 billion in July.

The UK service industry output increased in July largely due to higher output in distribution, according to figures released today.

Output of the services sector increased 1.2% annually in July, the Office for National Statistics said. The largest contribution to the increase was from distribution which rose 4.7%.

On a monthly basis, total services output fell 0.2% during July.

The UK M4 money supply, the broadest measure of money supply, fell a revised 0.1% in August from July, the Bank of England said today. This marks an upward revision on the 0.2% fall estimated preliminarily. M4 money supply rose 0.4% in July.

From a year ago, money supply increased 1.9% in August, also better than the preliminary estimate of a 1.8% rise. M4 money supply increased 2.3% annually in July.

British Airways plc signed an agreement to start a transatlantic joint business with American Airlines, a unit of U.S.-based AMR Corp. and Spanish carrier Iberia Lineas Aereas de Espana SA. The business is expected to be worth a combined $7 billion in annual revenues, the company noted.

Under the revenue share agreement, the three airlines would cooperate commercially on flights between the European Union, Switzerland and Norway and the United States, Mexico and Canada. The airlines will share the benefits from the joint business, irrespective of which carrier takes the booking.

Vedanta Resources Plc announced that The Madras High Court on Tuesday ordered closure of Sterlite Industries (India) Limited''s copper smelting plant at Tuticorin after noting that the company failed to comply with environmental issues.

Sterlite Industries, which is subsidiary of Vedanta Resources, said that it is awaiting full text of the court order to take corrective steps.

BP plc announced that it is to create a new safety division with sweeping powers to oversee and audit the company''s operations around the world. The Safety & Operational Risk function would have authority to intervene in all aspects of BP''s technical activities.

It is one of a number of major changes announced by Dudley as he prepares to take over his new role on October 1. In addition, Dudley disclosed that BP is to restructure its upstream segment from a single business into 3 functional divisions such as exploration, development and production and to carry out a detailed and wide-ranging review of how it manages third-party contractors.

Gainers & Losers

BG Group plc fell 1.91% to 1,130.00 pence after the natural gas company signed an agreement with Korea Electric Power Corporation for the sale of the group''s 40% interests in both the Santa Rita and San Lorenzo power stations in the Philippines for a net consideration of about $400 million.

FirstGroup plc surged 4.69% to 366.00 pence after the transport operator said its overall trading in the first-half remained “in line with management''s expectations.” The company said its UK Rail business has seen a continued strengthening in passenger volumes across all of its rail franchises. Like-for-like passenger revenues grew 4.4% in the period, despite the reduction in regulated fares from January 2010.

FirstGroup''s UK Bus business continued to perform steadily during the first-half of the year with like-for-like passenger revenues up 1.3% during the period.

Lansdowne Oil & Gas plc soared 20.69% to 8.75 pence after the oil and gas explorer said first-half loss narrowed 12.3% to £626,000 or 1.72 pence per share from £714,000 or 2.06 pence per share for the first-half of 2009.

London Stock Exchange Group plc fell 0.29% to 697.00 pence and in a trading update for the five-month period ended on August 31 the exchange reported a 12% rise in equity value traded and an 11% increase in average daily value traded. The UK exchange and the Italian subsidiary Borsa Italiana showed strong activity.

Michelmersh Brick Holdings plc slumped 11.19% to 29.75 pence after the specialist brick and landfill company reported first-half revenues increased 17.6% to £10.67 million from £9.07 million a year ago. Loss for the period narrowed 25% to £345,000 or 0.7 pence per share from £457,000 or 1.1 pence per share in the previous year.

Moss Bros Group plc advanced 2.27% to 22.50 pence after the branded suit maker first-half revenues, excluding VAT, rose 7.9% to £65.6 million from £60.8 million in the same period last year. Loss attributable to equity holders of the parent widened 38% to £3.34 million or 3.54 pence per share versus £2.42 million or 2.56 pence per share a year ago.

smartFOCUS Group plc climbed 1.96% to 14.02 pence after the provider of computer consultancy reported first-half revenues rose 17% to £6.59 million from £5.63 million in the comparable period a year earlier. Profit in the period advanced 100% to £216,000 or 0.21 pence per share, compared to a profit of £108,000 or 0.11 pence per share last year.

Smiths Group plc dropped 1.40% to 1,197.00 pence after the technology company reported fiscal 2010 sales increased 4% to £2.77 billion from £2.67 billion in the comparable period, driven by currency translation gains on overseas sales as well as net impact of acquisitions and disposals. Profit from continuing operations rose 6.6% to £294.2 million or 74.8 pence per share, compared to last year''s profit of £275.9 million or 70.1 pence per share.