UK Home Repossessions Surge, Stocks Drop 3%

123jump.com Staff
20 Feb, 2009
New York City

UK stocks slumped after economic data and poor earnings confirmed that the economic slump was worsening. Car production slumped 59% in January, while home repossessions increased 54% last year. Retail Sales however recovered in January according to the Office for National Statistics.

[R]1:00PM New York, 6:00 London – UK house repossessions surge. British Airways and Qantas Airways downgraded.[/R]

UK stocks slumped after economic data and poor earnings confirmed that the economic slump was worsening. Car production slumped 59% in January, while home repossessions increased 54% last year. Retail Sales however recovered in January according to the Office for National Statistics.

Moody’s Investors Service downgraded the credit rating of British Airways Plc and Qantas Airways Ltd on a weak profit outlook.

Anglo American Plc slumped 19% after it reported weak full-year earnings that forced it to defer dividend payments and cut about 19,000 jobs. The company also suspended a share buyback. The disappointing earnings hurt mining stocks. Rio Tinto Plc fell 9.5% on the news.

Market sentiment

In London trading the FTSE 100 index lost 3.2% or 129.31 or to 3,889.06. Of the 100 index shares only 6 gained and 94 lost.

Prudential Plc led advancers with a gain of 11% after reporting its fourth quarter results for 2008, followed by gains in Inmarsat Plc of 2.3%, in Sage Group of 2.1%, in Old Mutual Plc of 2% and Aviva Plc of 1.3%.

Anglo American Plc led decliners with a loss of 17%, followed by losses in the Royal Bank of Scotland of 11.5%, in Xstrata Plc of 10.6%, in Kazakhmys Plc of 9.8% and Rio Tinto Plc of 9.5%.

Anglo American reported that full-year net income for 2008 declined 29% to $5.2 billion. Underlying earnings fell to $4.36 a share.

UK mortgage woes deepen

The UK’s Council of Mortgage lenders today said that the number of homes repossessed last year increased 54% to 40,000 from the previous year and predicted the figure to rise to 75,000 properties in 2009. This represented a repossession ratio of 1:290 mortgages, the worst since 1996.

In the fourth-quarter alone, mortgage lenders repossessed about 10,400 properties compared to 6,900 in the comparable period of the year before.

Mortgage defaults increased last year the global slowdown triggered widespread retrenchments. However, the Council said number of repossessed property was 11% below their estimates.

Automotive industry contracts

The UK Society of Motor Manufacturers and Traders said that output from the automotive industry declined 59% in January as global car demand slackened.

The industry has recorded the worst job cuts and factory shutdowns so far largely because the global financial crisis has eroded disposable incomes as credit conditions tightened.