2:20 PM New York, 7:20 PM London – The UK first half budget deficit rises to £37.6 billion and exceeded the annual deficit of last year. Home prices drop 4.6% in October.

London market indices rose driven by commodity stocks on speculation that OPEC will significantly cut production when it meets at a meeting this Thursday. The cartel accounts for more than 40% of the world’s production and Iran and Venezuela are promoting a cut in production to lift prices back to $100 a barrel.

However government reports that showed that house prices declined 4.6% in October and the trade deficit increased the most since 1946.

Market Sentiment

In London trading FTSE 100 rose 5.4% or 219.66 to 4,282.67.

Of the FTSE 100 index stocks 87 rose, 14 declined, and one was unchanged. Royal Bank of Scotland led advancers in the index shares with a rise of 23.20% on reports it is advanced talks to sell its 20% stake.

House Prices Fall 4.6% in October

Rightmove Plc reported today that house prices rose 1% in October, but fell 4.9% from a year earlier to £229,691, the record monthly drop.

Estate agents are increasingly competing for scarce additional stock, while “property vultures” continue to scout for a good deal.

The report notes that the average unsold stock per estate agent fell to 76 from 78.

According to Rightmove Plc, rising unemployment and an “increasing pipeline of repossessions” will likely change the direction of the market as soaring forced sales drive prices lower.

Prospective buyers now spend 13 minutes per visit to the site as there seems to be pent up demand for properties at the right price.

The injection of £37 billion capital in RBS, Lloyds TSB and HBOS by the government may improve the access to mortgage seekers.

Commercial director of Rightmove Plc said, “For those who have been active in the housing market in the last 20 years, or were now hoping to get on the housing ladder following recent price falls, the rules have changed for good.”

U.K. First Half Budget Deficit Widens the Most Since1946

The Office of National Statistics reported that the country’s deficit in the first six months of the year through September rose to £37.6 billion from £21.5 billion in the comparable period a year ago and surpassed £35.8 billion shortfall for the whole of last year.

Analysts forecast that the deficit for the full year might widen to £64 billion or 4.4% of gross domestic product.

Gainers & Losers

Royal Bank of Scotland led advancers in the FTSE 100 index shares with a rise of 23.2% followed by increases in Prudential Plc of 22.3%, in Autonomy Corp. of 15.9%, in Rio Tinto of 13.1%, and Wood Group of 11%.

Royal Bank of Scotland rose after The Sunday Times reported that the lender is in advanced talks to sell a 20% stake.

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