UK Home Prices Fall, Oil Prices Rise

123jump.com Staff
06 Jan, 2009
New York City

UK house prices dropped 2.5% from a month earlier and 15.9% from a year ago to

[R]1:00PM New York, 6:00PM London - U.K. house prices decline 2.5% to £153,048 in December. U.K. services sector contracts in December.[/R]

Stocks in U.K. rose despite reports that showed house prices fell and the services sector shrank in December on worsening domestic economic conditions.

Retail stocks rose after retailers Debenhams and Next gave favorable forecasts. Debenhams, the department stores reported that the slowing trend of sales eased in the 18 weeks to January, while the Next maintained its full year profit forecast.

In London trading FTSE 100 index rose 1.3% or 59.28 to 4,638.92.

Of the FTSE 100 index stocks, 75 rose and 27 were unchanged. 3i Group led gainers in the index shares with a rise of 21.2%.

U.K. House Prices Fall 2.5% to £153,048 in December

Nationwide Building Society reported today that house prices dropped 2.5% from a month earlier and 15.9% from a year ago to £153,048 in December.

Prices are however lower than £17,500 more than five years ago.

The report notes that prices declined more than forecasted in 2008 due to credit conditions, expectations and affordability.

Nationwide Building Society said conditions remain volatile and it is difficult to forecast house prices.

“Until the economy and the labor market stabilize, it is hard to imagine households becoming upbeat about the immediate future for house prices and this will hinder the pace of recovery. In addition, the wider economic recession also impacts negatively on household expectations of future incomes,” said the mortgage lender.

U.K. Service Sector Shrinks in December

Chartered Institute of Purchasing and Supply said today its services PMI rose marginally to 40.2 in December from 40.1 in November.

A figure below 50 shows contraction.

The employment component of the PMI services survey fell to a record 40.5 from 43.1 the previous month.

Senior economist at Markit Economics, which carries out the survey with CIPS, Paul Smith said, “The near-term outlook for the services economy remains bleak. Companies (are) firmly in recessionary mode, cutting jobs at a rate unprecedented in twelve-and-a-half years of data collection.”

Gainers & Losers

3i Group led advancers in the FTSE 100 index shares with a rise of 21.2% followed by increases in Man Group of 17.4%, in Xstrata Plc of 13.4%, in Next Plc of 12.5%, and Standard Life of 12.4%.

Commodity stocks increased as crude oil prices jumped $1.8 to $48.90 per barrel and copper increased to $1.5195 per ton. Eurasian Natural edged up 11.2%, Rio climbed 11.1% and Antofagasta soared 7.9%.

Lloyds TSB led decliners in the FTSE 100 index shares with a drop of 5.3% followed by losses in Serco Group of 4.2%, in Johnson Matthey of 3.8%, in Bunzl Plc of 3.2%, and HSBC Holdings of 3.1%.