For the third consecutive month of increase, UK housing prices have increased. They are reported to have risen by as much as 1.6% in September. Housing prices in the UK continue to remain considerably lower than in September 2008, as much as 7.4 percent. However since the end of 2008, prices have grown by 1.7 percent as increased demand and reduced inventory have combined to push housing prices up, especially in the recent months. House prices increased by 2.8% in the third quarter of 2009, making for the first rise since the third quarter of 2007, and the largest percentage growth since the first quarter of the same year. The increased demand for property is believed to stems from improved affordability, and the reduction in both interest rates.

It may come to pass that the U.K.’s largest government-controlled bank, the Royal Bank of Scotland Group Plc (RBS) may have to surrender more than ten percent of their one million small business customers, The reason being that the European Commission has imposed a penalty on the RBS for receiving billions of pounds of state aid. Currently it is reported that the RBS, in a move designed to reduce their credit card risk portfolio are only issuing new cards to existing clients.

The Office for National Statistics has announced that U.K. manufacturing output has slumped 1.9% from the month in August whilst dropping 11.3% on a yearly basis. The wider industrial production measure fell 2.5% from July and slid 11.2% from August 2008.

The FTSE 100 rose by 2.26 percent on yesterday’s trading, or 113.65 points to close on 5137.98. The FTSE 250 was still on the rise, but at a reduced pace, closing up a further 25.12 points to close for the day on 9,226.35.

The pound made a minor recovery against the leading currencies, while continuing to hover around $1.60. The Sterling’s latest bout of weakness surrounding Sterling began after UK industrial production was shown to have slumped in August. Additional statistics released on Wednesday show that corporate profitability in the UK had deteriorated for a fifth successive quarter and is standing at its lowest level since 2001.

• Pound/US dollar 1.5958
• Pound/Euro 1.10863
• Pound/Japanese Yen 141.422
• Pound/Swiss Franc 1.64861

Europe’s largest discount airline, Ryanair Holdings Plc set aside as being of “no substance” recent reports claiming that the company is preparing to take control of Aer Lingus Group Plc through a rights issue. In another sign of the advantage that short-haul, low-cost carriers such as EasyJet hold over long-haul flag carriers during the current downturn, the company announced that it had handled more than 4.4 million passengers in September, an increase of 5.3 per cent over the corresponding month in 2008. The increase, the largest since April, was well above the 4.7 per cent rise the airline recorded in August, traditionally one of its busiest months. In any event, stock in EasyJet fell 0.3 percent, to 3.38 Euros.

According to Sir Terry Leahy, chief executive of Tesco, the worst is over for the UK economy as well as for the U.K.’s premier food retailer. Sir Terry’s revelation came after Tesco’s announced pre-tax profit for the first half of its financial year rose that had risen by 1 per cent to £1.42 billion. Sir Terry prediction is that that the UK would see a “slow and steady recovery” as the money pumped into the economy to stimulate it had to be paid back. He added that uncertainties over the financial outlook for 2010, such as public sector cuts, the proposed increase in value added tax and the threat of rising unemployment, would not be sufficient to prevent “a gradual recovery. Sir Terry also defended Tesco’s performance in the US, where its Fresh & Easy chain has reported losses of £85 million in the six months to the end of August. Shares in Tesco rose 0.4 percent, to 391.4 pence.

The management team at Matalan have reportedly held several meetings over the past few weeks to examine strategic options for the discount clothing and home-ware retailer. Subjects on the agenda included the possible sale of the company during 2010 with an asking price of around £1.5 billion pounds. If a sale was to go through, and discussions are at a very early stage, company founder John Hargreaves would be liable to realise hundreds of millions of pounds in profits from the sale. Matalan have invested significant sums of money in revamping their 200 UK stores have reported solid profits for June.

Shares in Vodafone, the World’s largest mobile phone service providers were under pressure for a second day, dropping 2 per cent to 137 pence. The share price fall could be attributed to a culmination of factors, among them, fears of a price war in India, and analyst’s predictions that AT&T was considering opening their mobile network to third-party voice applications such as Skype. A move that would put pressure on Vodafone’s Verizon Wireless division to emulate.

In the year to 30 September, the US budget deficit more than tripled to a record £877 billion ($1.4 trillion) according to US Congress estimate figures recently released. Analysts had previously predicted a slightly higher deficit but later revised their estimate, which has been attributed to increased government spending coupled with a huge drop in tax revenues. The actual deficit will be released by the Treasury Department later this month.

The Dow Jones index dropped a little on yesterday’s trading, closing on 9725.58, down 5.67 points. The NASDAQ index continued to rise, but at a slower pace, up just 6.76 points to close on 2,110.33.

The White House have announced that it was weighing policy options designed to create new jobs to ease the burden on America’s unemployed, currently numbering more than 15 million. A spokesman for the President hasted to rule out speculation that a second stimulus to provide a further boost to the US economy was on the cards. The majority of US economists believe that the country was on track to move out of recession. However the black cloud of increasing unemployment is hanging over the picture, with unemployment figures hitting 9.8 per cent, the highest rate since 1982.

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Tags: Aer Lingus Group Plc, AT&T, Banking, British Economy, British Pound, Credit Crunch, Currency, Dow Jones, EasyJet, Economy, Employment, European Commission, Financial News, Fresh & Easy, FTSE, Global Credit Crisis, House Prices, Matalan, Money, NASDAQ, Office for National Statistics, property, RBS, Recession, Royal Bank of Scotland Group Plc, Ryanair Holdings Plc, Sir Terry Leahy, Skype, Stock Markets, Stocks and shares, Tesco, The White House, Treasury Department, UK Banks, UK Economy, UK government, UK industrial production, UK Recession, Unemployment, US budget, US Congress, US economy, Verizon Wireless, Vodafone

According to their recently released annual report, the Financial Services Authority (FSA) Britain’s financial regulator, whose role in life is to supervise UK banks and help them to reduce debt; themselves have shown a deficit of £23 million pounds for the year.

In order to ease cash flow problems, the FSA have had to take up £100 million-pound loan from Lloyds Banking Group Plc As the FSA raises its revenue through fees that financial-services companies must pay to be regulated, and this latest bombshell is bound to mean some moments of discomfort for them. The agency announced that they will be raising their fees for the coming financial year to cover unexpected overheads.

Pension scheme burdens at U.K. banks HSBC and Barclays are reported to have increased dramatically during the first half of the year, largely due to an ongoing collapse in corporate bond yields. The deficit in HSBC’s main U.K. pension scheme was reported to have increased almost ten-fold from $392 million at the turn of the year to $3.9 billion at June 30.

It was announced on Tuesday that Australia’s ANZ have agreed to buy part of Royal Bank of Scotland’s Asian banking assets for $550 million. ANZ will be acquiring RBS units in Taiwan, Singapore, and Indonesia as well as in Hong Kong, the Philippines and Vietnam. The sale goes through as RBS continue in their drive to curtail their international activities after posting the biggest loss in UK history last year.

It was announced that nearly 75 percent of British shoppers now choose supermarket own labels, compared to only 25 percent a year ago. According to a recent survey, the rise was attributed supermarkets increasingly expanding their own ranges as well as cost-conscious consumers arriving at the conclusion that the fact that own brand ranges despite being cheaper do not fall for the quality of the “brand” products. In response, certain some private label brands such as Heinz, and Reckitt Benckiser (recently reported resurgence in demand for their branded products

Data centre provider Telecity announced an outstanding increase of pre-tax profits of 80 per cent for the first half of 2009 as their expansion program continues.
In the six months to June 30, revenue increased 33 per cent to £82.2 million, Telecity, are halfway through a three-year new-build programme that will almost double in its capacity, measured in megawatts of power available to customers.

The company announced that internet usage continues to grow, maintaining demand among Telecity’s customers, including technology services companies such as Hewlett-Packard as well as large telecommunications groups such as BT and AT&T.

Aerospace and defence stocks were under pressure on Tuesday as the FTSE 100 slipped from its 2009 high.

Defence contractor Qinetiq dropped 4.7 per cent to 135 pence after their interim trading statement reiterated profit would be weighted towards the second half due to US defence budget delays. Also shares in Rolls-Royce were down 1.8 per cent to 412 pence after brokers announced that the decline in demand for the company’s products would continue for several years.

Standard Chartered was the sharpest faller in the insurance sector, losing 7.5 per cent to 1328 pence after launching a surprise share issue to raise £1 billion in a drive to fund growth. Legal & General saw their shares down 4.8 per cent to 62 pence after their first-half operating profit were lower than market expectations due to investment losses as well as damped speculation that it might sell its asset management arm.

Pharmaceutical giant GlaxoSmithKline closed 0.1 per cent weaker at 1147½ pence after it was once again mooted as a potential bidder for Allergan, the Californian maker of breast implants and Botox.

After the announcement that they had struck oil in Uganda, shares in Tullow Oil outperformed a weak commodity sector, rising 2.6 per cent to 1021 pence.

Dana Petroleum was down 1.3 per cent to 1402 pence after Tethys Oil, its partner in Morocco, said it had plugged an exploration well after gas levels proved non-commercial.

Weakness among the banks and insurers led the FTSE 100 to close down 0.2 per cent, fading 11.09 points to 4,671.37.

Meanwhile the FTSE 250 continued to make considerable gains, climbing a further 84.4 points to close on 8,242.51

The pound has continued to gain against the dollar, rising as high as $1.7005 before falling back to $1.6938.

Pound/US dollar 1.6938
Pound/Euro 1.1763
Pound/Japanese Yen 160.6581
Pound/Swiss Franc 1.7985

US consumer spending climbed for the second consecutive month in June, despite growing unemployment and falling personal income.
Spending rose 0.4%, ahead of analysts’ estimates against 0.1% in May with rising food and fuel costs blamed.
Personal income fell 1.3% from the previous month – which had seen one-off stimulus payments from the government.
Consumer spending makes up about 70% of economic activity in the US.

Yesterday on Wall Street, the Dow Jones continued to climb up 33.63 points to 9320.19. The NASDAQ also crept up a little, 2.7 points to close on 2011.31.

The US House of Representatives has caused no little amount of consternation through inserting an amendment into their $33 billion spending bill that disallow any government money being spent on cars other than those made by the US “Big Three”, car manufacturing concerns. The proposed amendment has created considerable alarm from US trading partners in Europe and Japan, sparking claims of protectionism. A flurry of behind-the-scenes lobbying activity to make sure that the amendment is removed when the House bill is merged with a Senate version after Congress’s summer recess is already expected.

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Tags: AT&T, Bank, British Economy, BT, Economy, Financial News, Financial Services Authority, FSA, GlaxoSmithKline, HSBC, Legal & General, RBS, Retail, Rolls-Royce, Stocks and shares, Telecity, UK Banks