UK Home Prices Decline, BP Strike

123jump.com Staff
28 Apr, 2008
New York City

The Office of Fair Trade is likely to expand its investigation of price fixing between consumer companies and consumer products manufacturers. Several retailers including WM Morrison, Asda, and Sainsbury are likely to be contacted by the OFT. Home prices in the UK in fell 0.6% in April from March and dropped 0.9% from a year ago. The prices in London fell 0.7% in the month. UK refinery strike continues for the second day.

[R]2:00PM New York, 7:00PM London - U.K. home prices fall 0.6% in April and consumer companies are investigated for price fixing.[/R]

The Office of Fair Trade is investigating some of the biggest consumer goods companies for alleged price fixing between the companies and their suppliers. However rising crude oil prices helped to trim losses. Financial Times first reported news on its Web Site.

Market sentiment

In London trading FTSE 100 declined 0.02% or 1 to 6,090.40.

Of the 102 FTSE 100 stocks 50 gained, 51 declined and 1 was unchanged. Home Retail Group led advancers in the index shares with a rise of 4.58% after a report showed U.K. home prices advanced 0.6% in April.

U.K. home prices fall 0.6% in April

Hometrack Ltd reported today on its Web site that the average cost of a home in England fell 0.6% to £173,100 from the previous month in April and dropped 0.9% from a year ago.

The report notes that prices fell in 10 regions. Home prices in London fell 0.7%, while in East Anglia and West Midlands dropped 0.8%.

Also the average time to sell a home increase from 6 weeks to 9 weeks.

According to director of research at Hometrack Richard Donnell, the weak confidence in the market is resulting in a “buyers strike”, and the current downward pressure on prices will be reversed once “there is a turnaround in buyers’ confidence”.

Office of Fair Trade probes U.K. retail firm

The Financial Times reported today that some of the world’s biggest consumer goods companies are being investing by the Office of Fair Trading for alleged price-fixing between the companies and their suppliers.

According to the report, Proctor & Gamble confirmed yesterday that OFT visited the company on Thursday last week.

Asda, Sainsbury and WM Morrison also provided data about prices of groceries, health and beauty products and detergents to the organization.

Gainers & Losers

Home Retail Group led advancers in the FTSE 100 index shares with a rise of 4.58% followed by increases in Marks & Spencer of 4.09%, in Kazakhmys of 3.67%, in Cairn Energy of 3.02%, and Whitbread of 3.11%.

Kazakhmys and other commodity stocks rose on crude oil price increases after Opec’s president and Algeria’s energy minister Chakib Khelil said today oil prices could hit $200 a barrel and there would be little the cartel could do to help.

Crude oil prices today hit a record $119.93 a barrel before slumping to $119.52 a barrel as supply constraints mounted over a strike at the Grangemouth refinery in Scotland and deteriorating conditions in Nigeria.

Other commodity stocks gained as well. Xstrata Plc rose 2.22% and BHP Billiton increased 1.46%.

Whitbread Plc rose after reporting that net income rose from £281.8 million to £546 million in the year through February on higher occupancy at its Premier Inn budget hotels in London and the disposal of David Lloyd health-club chain.

Wood Group led decliners in the FTSE 100 index shares with a drop of 4.30% followed by losses in Shire Plc of 3.94%, in London Stock Exchange of 3.32%, in WM Morrison of 2.77%, and British Energy of 2.48%.

Other retailers also fell on news the OFT is probing some of the biggest consumer suppliers. Sainsbury shed 2.23% and Tesco declined 1.52%.

Royal Bank of Scotland may cut 25% of its staff

Royal Bank of Scotland is likely to cut its staff by 7,000 or 25% according to a report on Bloomberg news service. RBS has recently acquired securities and Asian investment banking operations from ABN Amro at most analysts consider at very high price. RBS in a statement acknowledged that certain reduction in staff is necessary but failed to say by how many.