UK Home Prices Slump; BP, SOCAR Deal

Arthi Gupta
07 Oct, 2010
New York City

The UK indexes rose after the BoE held key rate at 0.5% and quantitative easing at

[R]4.00 PM London – The UK indexes rose after the BoE held key rate at 0.5%. and quantitative easing at £200 billion. The UK home prices plummeted 3.6% in September and manufacturing output grew in August. BP and SOCAR signed deal to develop deepwater gas field in Azerbaijan.[/R]

The European Central Bank left its key interest rate unchanged at a record low of 1% for the seventeenth straight month.

In London, FTSE 100 Index traded lower 10.79 or 0.19% to 5,670.60 and the pound edged higher to close at $1.5959.

The Bank of England left its key interest rate unchanged at a record low again and maintained the size of the quantitative easing at £200 billion as expected.

At the end of two-day rate setting meeting, the Monetary Policy Committee decided to retain the interest rate at 0.5%. The current rate is the lowest since the central bank was established in 1694.

Policy makers also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion. The minutes of the meeting will be released on October 20.

A survey data released by Lloyds Banking Group Plc''s Halifax division stated that home prices in the United Kingdom plunged in September. The lender said a rise in the number of properties coming on the market and renewed uncertainty about the economy and jobs had led to the sharp downturn.

Home prices declined 3.6% on a monthly basis in September, following a 0.2% gain in August. The 3.6% fall is the biggest recorded since records began in 1983. On an annual basis, home prices rose 2.6% in September, compared to a 4.6% increase in August.

The average price of a UK home slumped to just over £162,000 in September from a little over £168,000 in August.

The UK manufacturing output grew 0.3% in August from July, according to data from the Office for National Statistics released today. The largest positive contributions to overall output were increases of 2.3% in the food, drink and tobacco and 1.9% in the transport equipment industries.

John Hutton, Chairman of the Independent Public Service Pensions Commission said in Liverpool today that long-term structural pension reform is needed in the UK.

He said the final salary link in public service pensions is inherently unfair and can lead to high flyers getting almost twice as much back in pensions than those on more modest earnings for the same amount of pension contributions.

BP plc and the State Oil Company of the Republic of Azerbaijan or SOCAR signed a new production sharing agreement on joint exploration and development of the Shafag-Asiman structure in the Azerbaijan sector of the Caspian Sea. The block lies some 125 kilometers to the SE of Baku covering an area of some 1100 square kilometers.

HSBC Infrastructure Co. Ltd. signed a binding conditional agreement to acquire an interest in two UK PFI and in two Canadian P3 projects from subsidiaries of Bilfinger Berger AG. The total consideration, including deferred investment subscription obligations of approximately £46.1 million, is approximately £65.9 million at current exchange rates.

Gainers & Losers

Halfords Group plc plunged 6.49% to 418.00 pence after the retailer of car parts, car enhancements and bicycles expects group profit before tax for the first-half to be in the range of £67 million to £69 million.

Intercede Group plc soared 15.29% to 49.00 pence after the developer and supplier of identity and credential management software said sales revenues for the first-half are more than 20% higher than last year resulting in an increase in profit at all levels.

Marks & Spencer Group Plc gained 4.91% to 410.00 pence after the retailer said its group sales for the second quarter increased 6.5%, helped by strong results in UK, General Merchandise and food segments.

Michael Page International Plc fell 2.80% to 465.00 pence after the specialist recruitment consultancy said its third quarter group gross profit increased 37.0% to £112.7 million, from £82.3 million in the third quarter of 2009. Third quarter perm/temp ratio was 78:22 versus 71:29 a year earlier.

The Rank Group plc surged 4.69% to 127.20 pence after the gaming and betting business reported a 7% like-for-like growth in group revenue for the third quarter, driven by improvements in each of its businesses. Total group revenue for the period increased 8%.

UK Mail Group plc declined 0.26% to 384.00 pence after the provider of express collection and delivery services for parcels, mail and palletized said its first-half trading performance continued to be in line with management expectations. Group revenues showed an increase of some 1% compared with the prior year.

Vedanta Resources plc edged higher 0.63% to 2,237.00 pence after the mining and metals company said its second quarter mined metal production was 205,000 tons, up 6.2% compared with the corresponding prior period.