Mortgage Worries Drag UK Lower

Market Update Analysis:

Author: 123jump.com Staff
123jump.com
Last Update: 4:02 PM EDT April 11 2008

Stocks in London fell after General Electric in the U.S. reported its profit decline in five years. The news sent markets in New York and Europe lower. In addition, mortgage lender trade associations forecasted tougher outlook for mortgage lending and asked the Bank of England to add more liquidity to the system. UK lenders group forecasted that mortgage volume may fall as much as 50%. A private equity group said that it will withdraw its offer for Friends and Provident at the end of the month.

1:00PM New York, 5:00PM London - General Electric drags London lower

London stock averages fell after General Electric reported its first quarterly profit decline in five years. Investors were also unnerved by the gloomy outlook in the mortgage sector by the Council of Mortgage Lenders.

In London trading FTSE 100 fell 1.17% or 69.6 to 5,895.50.

Of the FTSE 100 stocks 23 rose, 76 declined and 3 were unchanged. Vedanta Resources led advancers in the FTSE 100 index shares with a rise 3.73% followed by a rise I International Power of 2.98%.

Council of Mortgage Lenders urges BOE to inject liquidity

Chairman of the Council of Mortgage Lenders Steven Crawshaw today urged the Bank of England to inject further liquidity to improve mortgage market.

Commented Crashaw said, “Today, the picture is one of slightly lower demand for mortgages since our forecast. But potential borrowing still significantly exceeds the industry’s collective capacity to supply funds. It is therefore a real possibility, looking forward from today, that net lending in 2008 could reach only half last year’s level unless additional funds become available.”

General Electric first quarter profit falls 6%

General Electric Company today reported revenue for the first quarter ended 2008 climbed 8% to $42.24 billion from $39.20 billion.

First quarter net income fell 6% to $4.3 billion or 43 cents per share from $4.57 billion or 44 cents per share for the same quarter of year ago. Earnings from continuing operations totaled $4.4 billion, or 44 cents per share, down 8% year-over-year.

""""Demand for our global infrastructure business remained strong, but our financial services businesses were challenged by a slowing U.S. economy and difficult capital markets,"""" said Chairman and CEO Jeff Immelt.

Gainers & Losers

Vedanta Resources led advancers in the FTSE index shares with a rise of 3.73% followed by rises in International Power Plc of 2.98%, in Amec Plc of 2.85%, in Sainsbury of 2.47%, and Tullow Oil of 2.38%.

Amec Plc rose after UBS AG raised its recommendation for the engineering adviser to ``buy'''' from ``neutral''''.

BAE Systems led decliners in the FTSE 100 index shares with a drop of 4.86% followed by losses in Vodafone Group of 4.34%, in ICAP Plc of 3.63%, in Friends Provident Plc of 3.55%, and Rolls Royce Plc of 3.24%.

Friends Provident Plc fell on Financial Times reports JC Flowers & Co. will withdraw its takeover bid for the U.K. insurer before the April 30 deadline if Friends declines talks with the company.

Financial stocks fell as well on the deteriorating outlook on the U.S. economy. Lloyds TSB Group fell 2.97%, Barclays fell 2.21% and HBOS Plc 1.84%.

Land Securities dropped 1.95% and Hammerson fell 2.23%.

World markets

In Tokyo Nikkei 225 Index closed higher 378.43 or 2.92% to 13,323.73, in Hong Kong Hang Seng index increased 480.69 or 1.99% closed to 24,667.79. In Australia ASX 200 index lower 7.10 or 0.13% to close 5,439.30. In Malaysia KL Composite index decreased 1.40 or 0.11% closed to 1,246.79.

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