Alliance Leicester Plunges 10%

123jump.com Staff
13 May, 2008
New York City

London stock indexes declined after a government report showed that inflation rose from 2.5% in March to 3% in April and on news that the government expects house prices to fall between 5% and 10% this year. In London trading FTSE 100 fell 0.14% or 8.7 to 6,211.90. Alliance & Leicester fell 10% after saying in a statement today that writedowns topped

[R]1:00PM New York, 5:00PM London - U.K consumer price inflation rises to 3% in April.[/R]

London stock indexes declined after a government report showed that inflation rose from 2.5% in March to 3% in April and on news that the government expects house prices to fall between 5% and 10% this year.

In London trading FTSE 100 fell 0.14% or 8.7 to 6,211.90.

Of the 102 FTSE 100 stocks, 32 gained and 70 declined. Rio Tinto Plc led advancers in the index shares with a rise of 3.68%.

U.K inflation rises to 3% in April

The Office for National Statistics reported on its Web site today that the country’s Consumer Price Index (CPI) annual inflation rose from 2.5% in March to 3% in April, with the largest contribution from housing and household services due to changes in the price of gas, electricity and heating oil.

Prices for food and non-alcoholic beverages rose, especially meat, fruit, some breads and cereals and fish increased sharply; miscellaneous goods and services where prices rose this year but fell last year. Transport costs including air transport and fuels and lubricants fell after rising sharply in the month of March. Airfares fell in April after a rise in March, with the largest decline in European flights. Clothing and footwear prices declined in the month as well.

According to the statistics office, the Retail Price Index inflation rose to 4.2% in April from 3.8% in March. In addition, there were downward contributions to RPI from house depreciation, council tax and vehicle excise duty.

Also the RPIX inflation – the all items RPI excluding mortgage interest payments – was 4% in April from 3.5% in March.

House prices to fall between 5% and 10% this year

The Financial Times reported that Housing Minister Caroline Flint expects prices to fall between 5% and 10% this year and mortgage defaults are expected to rise from the current levels.

In a separate report, the Royal Institute of Chartered Surveyors reported on its Web site today that 95.1% more Chartered Surveyors reported a fall than a rise in house prices from 79.4 % in March.

RICS noted that the scale of house price falls remains relatively small at this stage compared to past downturns. Statistics also show that 68% more Chartered Surveyors reported a fall than a rise in new buyer enquiries, up from 51% in January.

Gainers & Losers

Rio Tinto led advancers in the FTSE 100 index shares with a rise of 3.68% followed by increases in Vedanta Resources of 3.11%, in Eurasian Natural of 3.07%, in Imperial Tobacco of 1.60%, and SABMiller of 1.54%.

Alliance & Leicester led decliners in the FTSE 100 index shares with a drop of 10.14% followed by losses in G4S Plc of 6.25%, in HBOS Plc of 4.06%, in Cairn Energy of 3.82%, and BG Group of 3.71%.

Alliance & Leicester fell after saying in a statement today that writedowns topped £391 million, which includes £ 199 million that will not have a bearing on the company’s profit.

Homebuilders fell after the government expectations of a decline in home values and a rise in mortgage default rates. Persimmon fell 3.25%, Home Retail Group shed 2.62% and British Land Co. declined 2.09%.