UK Home Prices Rise, Deficit Widens; Prudential Net Up 33%

Arthi Gupta
13 Mar, 2012
New York City

The UK indexes advanced after home prices rose in February and trade deficit widened, leading economic index climbed and Irish factory output declined in January. Prudential fiscal 2011 pre-tax profits surged 33%.

[R]3:30 PM London – The UK indexes advanced after home prices rose in February and trade deficit widened, leading economic index climbed and Irish factory output declined in January. Prudential fiscal 2011 pre-tax profits surged 33%.[/R]

The UK indexes gained on the cautious optimism that Greece will win its share of bailout from the IMF and better-than-estimated retail sales in the U.S. The trade deficit widened in January and home prices increased in February.

Euro-zone finance ministers approved a second bailout package for Greece in a meeting in Brussels yesterday.

Greece may have to cut its government spending as much as 5.5% of GDP in 2013 and 2014 according to the latest report released by the European Commission report released today. The additional cuts are needed to meet the deficit target set by the international lenders.

The government revenues are lagging the earlier projections set by the government and additional cuts are needed to meet deficit targets and improve government finances.

In London trading, FTSE 100 Index gained 34.51 or 0.6% to 5,927.16 and the pound edged lower to $1.5623.

UK Home Prices Rise

Home prices in the United Kingdom increased in February, according to the Royal Institution of Chartered Surveyors.

The RICS House Price Balance index rose to a seasonally adjusted reading of minus-13 in February from minus-16 in January, the organization said today. The reading was the highest since July 2010.

The survey''s index of price expectations for the next three months improved to zero from minus-14 in January, its highest level since May 2010.

In a separate report, the home price index increased 0.2% annually in January, after rising 0.1% in December, data from a survey by the Department for Communities and Local Government showed today.

From a month ago, home prices declined a seasonally adjusted 0.7% in January, following a 0.4% rise in December.

The average mix-adjusted house price in the UK increased to £206,523 from £205,269 in December.

UK Deficit Widens

UK''s trade deficit widened to £7.5 billion in January from £7.2 billion in December, according to a report released by the Office for National Statistics today.

Exports climbed £0.5 billion or 2% from December and imports advanced £0.8 billion or 2.6% in January.

The deficit in trade in goods and services increased to £1.8 billion in January from £1.2 billion in December. The surplus in trade in services fell to £5.8 billion in January from £6 billion a month ago.

UK Leading Index Climbs

The leading economic index for the UK increased 0.9% to 103.1 in January, after declining 0.5% in December, data from a survey by the Conference Board showed today.

Irish Factory Output Falls

Ireland''s manufacturing output declined a seasonally adjusted 0.1% annually in January following the 3.0% fall in December, data from the Central Statistics Office showed today.

From a month ago, production increased 0.7% in January compared to the 4.4% gain in December.

Gainers & Losers

AstraZeneca plc rose 0.2% to 2,882.50 pence after the biopharmaceutical company said it filed a lawsuit against the US Food and Drug Administration for decision regarding quetiapine product labelling and exclusivity.

Capita plc increased 0.7% to 751 pence after the business process outsourcing and recruitment company signed a contract to work in partnership with the armed forces.

The contract, valued at around £44 million a year for 10 years, is expected to deliver benefits in excess of £300 million to the armed forces and will release military recruiters back to the front line.

Essar Energy PLC climbed 0.5% to 108.80 pence after the India based energy company announced that Essar Oil Ltd has successfully commissioned the Diesel Hydrotreater Unit 1 as part of the Phase I expansion at its crude oil refinery in Vadinar, Gujarat.

Prudential plc climbed 1.2% to 737 pence after the insurer reported fiscal 2011 total revenue, net of reinsurance, declined 23.4% to £36.51 billion. Pre-tax profit attributable to shareholders on IFRS basis surged 33% to £1.94 billion from £1.46 billion last year.

Standard Life Plc gained 0.1% to 237.80 pence after the life assurance firm said fiscal year 2011 total income rose 5.2% to £1,579 million from £1,501 million the year before.

Group assets under administration increased 3% to £198.4 billion by the end of the year from £192.9 billion at the end of 2010.