UK Stocks Lower, Home Prices Fall

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

Stocks in London fell after weak housing market data and lack of interest in financial stocks. Two separate surveys showed a decline in home prices in June and indicated further declines are likely as credit markets remain tight. Financial stocks fell after Australia and New Zealand Banking Group tripled its loan delinquencies rate. Royal Bank of Scotland sold its stake in a joint venture with Tesco to the retailer.

[R]1:00 PM New York, 6:00PM London – Weak housing market data and fall in financial stocks dragged London market averages lower.[/R]

London market averages fell, led by financials after Australia and New Zealand Banking Group said it has tripled its provisions for delinquent loans from a year ago.

A rise in mining company stocks and gains in metals and oil prices helped to trim losses.

Market Sentiment

In London trading FTSE 100 fell 0.75% or 40 at 5,312.60.

Of the 102 FTSE 100 stocks 29 rose, 72 declined, and 1 was unchanged. Antofagasta led advancers in the index shares with a rise 7.14% after commodity stocks gained.

U.K. Home Prices Fall

Hometrack Ltd reported in a statement that home prices dropped 4.4% to £168,500 in England and Wales in July from the same period a year ago, the biggest in seven years.

Director of research, Richard Donnell said activity levels will most likely remain subdued “with prices remaining under pressure in autumn” as the current uncertainty continues.

Separately, the Land Registry also reported on its Web site today that the average house prices in England and Wales fell 1% to an average price of £180,781 in June, while the annual house price growth shows a decline for the tenth consecutive month, with an increase of 0.1%.

According to the registry, house prices in London declined 2.5% to £345,136 in June but rose 2.4% from a year ago. However the North East bucked the downtrend with a rise of 4.1% and gained 3.1% from a year ago to £133,508.

However the National Housing Federation reported in its report titled Home Truths 2008 indicates that the average house price in England will increase by 25% over the next five years to £274,700. The document noted that the least affordable place in 2007 was London, where a typical home was 14.2 times local salaries, compared to a national average of 11.2.

The Federation notes that last year 167,577 new homes were completed, with the total number of completions expected to fall this year to 120,000.

Federation Chief Executive David Orr said: “Despite concerns about the current housing market downturn, house prices will increase substantially over the mid to long term. Demand for housing is going up, while the supply of new homes is going down. This means that as soon as the economic outlook improves house prices will resume their previous upward trajectory.”

Gainers & Losers

Antofagasta led advancers in the FTSE 100 index shares with a rise of 7.14% followed by increases in Vedanta Resources of 4.99%, in Kazakhmys of 4.60%, in Eurasian Natural of 4.55%, and BHP Billiton of 4.4%.

Antofagasta rose as oil prices hovered around $125 per barrel on concern about dry weather in the US next month. Rio Tinto increased 2.95%, in Tullow Oil edged up 2.82% and Xstrata gained 2.72%.

HBOS Plc led decliners in the FTSE 100 index shares with a fall of 7.33% followed by losses in Rexam Plc of 6.57%, in Friends Provident of 5.21%, in Barclays of 4.98%, and British Airways of 4.96%.

Financial stocks gained after Australia and New Zealand said that it has tripled its provisions for delinquent loans. Royal Bank of Scotland dropped 4.07% and Old Mutual declined 4.63%.

RBS to sell 50% shareholding in Tesco Personal Finance to Tesco

Royal Bank of Scotland Group reported today on its Web site that it has agreed to sell its 50% shareholding in Tesco Personal Finance to its joint venture partner, Tesco plc for £950 million cash, subject to transaction adjustments.

RBS will, however, continue to provide certain commercial services to TPF after the sale.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 19.02 or 0.14% to 13,353.78, Hang Seng index in Hong Kong decreased 53.50 or 0.24% closed to 22,687.21. ASX 200 index in Australia decreased 48.40 or 0.97% to close 4,922.10. The KL Composite index in Malaysia increased 14.34 or 1.26% closed to 1,156.09.

The Kospi Index in South Korea increased 0.36 or 0.02% to close at 1,598.29, SET index in Thailand closed higher 0.06 or 0.01% to 685.53 and JSE Index in Indonesia increased 30.33 or 1.35% to 2,275.68. The Sensex index in India increased 74.17 or 0.52% to 14,349.11.

Europe Markets Review

In London FTSE 100 Index closed lower 40.00 or 0.75% to 5,312.60, in Paris CAC 40 Index decreased 52.73 or 1.20% to close at 4,324.45 and in Frankfurt DAX index lower 85.56 or 1.33% to close at 6,351.15. In Zurich trading SMI decreased 46.10 or 0.66% to close at 6,968.93.