UK Indexes Gain 1.3%; Mortgage Approvals Rise

Arthi Gupta
29 Jun, 2011
New York City

The UK indexes extended gains after the Greek parliament approved austerity measures. UK services index edged up in April. Mortgage approvals in the UK rose but M4 money supply declined in May. Irish unemployment increased to 14.2% in June.

[R]4:30 PM London – The UK indexes extended gains after the Greek parliament approved austerity measures. UK services index edged up in April. Mortgage approvals in the UK rose but M4 money supply declined in May. Irish unemployment increased to 14.2% in June.[/R]

The benchmark index in London traded higher ahead of the Greek vote. The widely accepted passage of Greek austerity measures now shifts the focus of investors to the implementation of measures and the strength of the Greek economy.

The Greek parliament approved the government''s austerity measures that were demanded by foreign lenders before the release of additional money. Lawmakers voted 155 to 138 in favor of the €28 billion in expenditure cut and tax hikes as well as a €50-billion privatization plan.

The parliament is set to vote on Thursday on a change in law allowing the cost-cutting package to be put in place.

In London, FTSE 100 Index gained 75.96 or 1.30% to 5,842.63 and the pound edged lower to $1.6008.

UK Services Index Rises

UK service sector index increased 0.8% in April from a year ago month. Between March and April output from the service sector decreased 1.2%. The largest contribution to the increase was 3.7% in the transport, storage and communication.

UK Mortgage Approvals Up

Gross lending by mutuals, widely known as building societies, totaled £1.8 billion in May 2011, up 20% compared to the £1.5 billion in May 2010. Mortgage approvals by mutuals, also £1.8 billion, were up by 15% compared to the £1.6 billion approved in May last year.

Savings balances held with mutuals fell by £418 million in May 2011 compared to a reduction of £373 million in May 2010.

Separately, the UK mortgage approvals increased less than expected in May, data from the Bank of England showed today.

The number of loans approved for home purchases increased to 45,940 in May from 45,447 in April.

Total lending to individuals rose £1.3 billion in May, similar to the previous six-month average of £1.2 billion. Annually, the growth remained unchanged at 0.8%.

UK M4 Money Supply Drops

M4, which is a measure of the quantity of UK money supply, dropped a seasonally adjusted 0.2% in May, following a 0.9% fall in April, data from Bank of England showed.

On a monthly basis, M4 money supply edged up a seasonally adjusted 0.1% in May, matching gains of the previous two months. It was the third consecutive monthly increase.

Irish Retail Sales Eases, Unemployment Rises

Ireland''s retail sales volume declined 2.1% annually in May compared to the 4.2% fall in April, data released by the Central Statistics Office showed. Retail sales of food, beverages and tobacco declined 4.3% annually.

On a monthly basis, retail sales volume gained 1.3% in May reversing the 0.9% decline in April.

Separately, the agency said Ireland''s standardized unemployment rate increased to 14.2% in June from 14.1% in May. The live register total, which refers to the number of persons registering for unemployment benefit, increased to 457,948 in June from 440,947 in the previous month.

Gainers & Losers

AstraZeneca PLC gained 1.57% to 3,081 pence after the global biopharmaceutical company entered into an exclusive research collaboration and license agreement with PTC Therapeutics, Inc. for the application of PTC''s proprietary GEMS technology for the discovery and development of potential new therapies for cancer and other diseases for which there is a great unmet medical need.

Betfair Group Plc climbed 0.13% to 772.50 pence after the Internet based casino operator reported fiscal year 2011 revenues grew 15.4% to £393.31 million from £340.92 million a year ago. Profit before tax for the period increased 50% to £26.62 million from £17.78 million reported in the previous year.

The British Land Company PLC rose 1.95% to 600.50 pence after the largest property development and investment companies said it bought Grenfell Island, a prime office and leisure scheme totaling 198,000 sq ft in Maidenhead town centre, for £74 million representing a net initial yield of 7.5%.

Mattioli Woods plc dipped 0.36% to 274.00 pence after the wealth management company said trading for the second-half and the year overall was in line with the board''s expectations.

Stagecoach Group Plc increased 2.20% to 255.70 pence after the public transport operator reported fiscal year 2011 revenue rose 10.6% to £2.39 billion from £2.16 billion in the previous year, with growth in all divisions in the UK and North America.

Pre-tax profit for the year surged 52% to £191.2 million from £125.9 million last year.