UK Indexes Up 0.7%; Sluggish Mortgage Lending, Record Low Confidence

Nigel Thomas
18 Mar, 2011
New York City

UK stocks traded higher matching the gains in Europe and world markets. Crude oil declined after Libya announced a no-fly zone. UK mortgage lending in February declined as home market remained sluggish and consumer sentiment index dropped to the low last seen in 2004.

[R]3:55 PM London – UK stocks traded higher matching the gains in Europe and world markets. Crude oil declined after Libya announced a no-fly zone. UK mortgage lending in February declined as home market remained sluggish and consumer sentiment index dropped to the low last seen in 2004.[/R]

Stocks in London opened higher following the gains in Europe and Asia after G-7 nations agreed to coordinate their efforts to drive the yen lower. Separately, China’s central bank lifted bank reserve ratio by 50 basis points.

Japan’s finance minister Yoshihiko Noda announced the agreement at a press gathering at the finance ministry after a 90-minute teleconference with G7 members.

The currency intervention was the first coordinated action since 2000 also highlighted the fragile global economic recovery and prevent Japan from sliding into a recession as its export led companies drive the economic growth.

The FTSE 100 index increased 0.7% or 40.23 to 5,746.34 and FTSE 100 All Share index gained 0.75% to 2,982.06.

Crude oil declined sharply in London and New York trading after Libya announced a cease-fire a day after the U.N. passed a resolution to establish a no-fly zone over Libya.

Brent crude declined to $113.40 from as high as $117.10 in the early trading.

Mortgage lending in February was nearly unchanged from January according to the latest data released by the Council of Mortgage Lenders.

The lending in the month was £9.5 billion and rose slightly from a year ago month of £9.4 billion.

In a separate data released by the Bank of England earlier confirmed the softness in the housing market. The number of application approved for home lending increased 2,000 in February from the previous month to 43,000 and approvals declined 14.6% from a year ago.

UK consumer confidence index tracked by the Nationwide Building Society dropped 10 to a record low of 38 last seen in 2004 when record keeping began.

Chief economist Robert Gardner in the Nationwide report said economic recovery is “sluggish” and labor market remains “fragile.”

Gardner also cited lack of any good news on the horizon and people are worried of rising inflation as crude oil prices continue to surge.

The report also highlighted the survey of consumer estimate of the home market and participants estimated home prices to decline 1.1% over the next six months. The decline of the same amount was estimated in January.

Cash sale of homes are now 40% of all sales and in the luxury segment of property valued more than £1 million are now more than 50% have accelerated ahead of 5% stamp duty.

Stock Movers

Go-Ahead Group increased 5.4% to 1,400 pence after the railroad operator confirmed that it will continue to operate Southeastern rail franchise in Kent until 2014.

Berkley Group Holdings increased 3.5% to 1,039 pence after London focused home builder estimated earnings for the full-year ending in April near the upper end of the range forecasted by analysts.

Drax Group added 2.7% to 421 pence on the expectations of higher natural gas prices.

William Hill edged up 0.6% to 178.20 pence after the company won a court approval to block a sale of stake in its online property.