UK Retail Sales Improve, Mortgage Lending Up

Arthi Gupta
21 Jun, 2012
New York City

The UK indexes edged lower as world economic growth outlook dims. The UK retail sales improved and gross mortgage lending increased 24% in May. Invensys plunged 16% after takeover talks with Emerson Electric failed.

[R]1:45 PM London – The UK indexes edged lower as world economic growth outlook dims. The UK retail sales improved and gross mortgage lending increased 24% in May. Invensys plunged 16% after takeover talks with Emerson Electric failed.[/R]

Investors in London trading were on the sidelines as leaders of the European Union gather for a two day meeting in Luxembourg and investors focus in debt contagion widening to Spain.

In London, the benchmark index FTSE 100 fell 17.93 or 0.3% to 5,604.35 and the pound edged higher to $1.5701. Brent crude oil price declined in London trading near $92 a barrel price, the lowest in a year.

Antonis Samaras, leader of the conservative New Democracy party was sworn in as Greece''s new Prime Minister on Wednesday and will lead a coalition government of three parties.

However, new government is expected to demand longer repayment schedules and soften the harshest measures of austerity demanded by international lenders.

Increasingly, investors have shifted their focus to Spain as the struggling nation drifts to a larger bailout sooner than earlier expected. Bond yields of Spain remain close to unsustainable 7%, economic growth remains weaker than expected and banking industry is struggling with rising home loan losses.

UK Retail Sales Improve

The UK retail sales improved in May after easing in April, the Office for National Statistics said today.

Retail sales volume, including automotive fuel, rose 1.4% in May from the 2.4% fall in April.

Excluding fuel, retail sales volume rose 0.9% on a monthly basis in May after declining 1.1% in April.

Retail sales volume increased 2.4% annually in May from 1.4% in April. Food store sales grew 1% from a year ago, while non-food store sales advanced 3.3% in May.

The total retail sales value index increased 3.3% in May from a year ago and increased 1% compared to April.

Separately, UK manufacturers'' order book balance increased from the previous month in June, the latest monthly Industrial Trends Survey by the Confederation of British Industry showed.

Nearly 17% of respondents reported that total order books were above normal in June, while 28% said they were below normal. The resulting rounded balance of -11% was higher than -17% recorded in May.

UK Gross Mortgage Lending Up

UK gross mortgage lending increased 24% in May from April, data published by the Council of Mortgage Lenders said.

Lending was estimated at £12.2 billion, up 13% from May 2011.

Gainers & Losers

Ashtead Group Plc soared 3.7% to 259.60 pence after the investment manager said fourth quarter revenue rose 17% to £287.8 million from £242.8 million last year. Net profit in the quarter was £23.5 million or 4.6 pence a share compared to a net loss of £13.1 million or 2.6 pence a share last year.

Interserve plc gained 1.9% to 305.50 pence after the support services and construction group agreed to sell part of its holding in the University College London Hospitals PFI project to CFIG Unicorn Holdings SPV, LLC.

Invensys plc plunged 16% to 215.90 pence after the engineering company confirmed that it is no longer in a takeover discussion with Emerson Electric Co.

John Wood Group PLC rose 0.5% to 718 pence after the energy services firm was awarded a multi-year engineering, procurement and construction management framework agreement by Shell Oil Products US.