UK Economy Contracts 0.2%; Mortgage Approvals Climb

Arthi Gupta
25 Jan, 2012
New York City

The UK indexes edged lower after the economy contracted in the fourth quarter, services index increased more than anticipated in November and mortgage approvals rose in December. HSBC agreed to sell its retail banking and wealth management business in Thailand.

[R]3:00 PM London – The UK indexes edged lower after the economy contracted in the fourth quarter, services index increased more than anticipated in November and mortgage approvals rose in December. HSBC agreed to sell its retail banking and wealth management business in Thailand.[/R]

The UK indexes declined after the economy shrank more than anticipated to 0.2% in the December quarter and bankers and Greece remained at odds in bond restructuring talks.

The Bank of England policymakers decided to leave the key interest rate unchanged at 0.50% and held the quantitative easing at £275 billion on January 12, according to minutes of the rate-setting session released today.

In London, FTSE 100 Index declined 43.63 or 0.8% to 5,706.23 and the pound edged lower to $1.5555.

At the conclusion of two days meeting of euro zone finance ministers in Brussels, the European Union officials pressed for more growth measures and employment and finalized the establishing of a permanent rescue fund that could be running by July.

However, leaders are still negotiating the size of the fund that could range anywhere between €700 billion and €1 trillion.

UK GDP Contracts

The UK gross domestic product dropped 0.2% in the fourth quarter, after expanding 0.6% in the third quarter, according to the preliminary estimates from the Office for National Statistics released today.

On a yearly basis, gross domestic product increased 0.8% in the fourth quarter. For the year 2011, growth eased to 0.9% from 2.1% in 2010.

UK Manufacturers'' Sentiment Declines

The UK manufacturers'' sentiment deteriorated over the last three months, a survey from the Confederation of British Industry showed.

The order book balance was at -16 percent in January, the Industrial Trends survey conducted between December 15 and January 11 showed.

UK Services Index Rises

The UK''s services index increased more than anticipated in November, data released by the Office for National Statistics showed today.

The index of services increased 0.6% on a monthly basis in November, after dropping 0.6% in October.

On an annual basis, the index of services grew a seasonally adjusted 1.6% in November compared to the 1.2% growth in October.

UK Mortgage Approvals Climb

The number of mortgage approvals for home purchase in the United Kingdom rose to 36,171 in December from 34,809 in November, data from a survey by the British Bankers'' Association showed today.

The total value of home purchase approvals increased to £5.3 billion in December from £5.1 billion in November, while the average value of home purchase approvals dropped to £145,200 from £146,400.

Gainers & Losers

BTG PLC rose 2% to 325.70 pence after the healthcare firm reiterated that revenues for the full year are expected to be in the range £160 million to £165 million.

HSBC Holdings PLC fell 1.1% to 534.10 pence after the bank agreed to sell its retail banking and wealth management business in Thailand to Bank of Ayudhya PLC for approximately $112 million. The value of the gross assets sold was around $553 million.

Kenmare Resources climbed 0.2% to €0.57 after the Irish mining company reported revenue surged 83% to $167.5 million in 2011from $91.6 million in 2010.

Rio Tinto Plc climbed 0.1% to 3,704 pence after the miner raised its stake in Canada based Ivanhoe Mines to 51% from 49% that controls vast copper and gold resources in Mongolia.

Weir Group PLC soared 3.1% to 1,987 pence after the industrial engineer agreed to acquire U.S. oil and gas pump valve maker Novatech for $176 million or £113 million in cash.