London pre-open: Slow start expected as confidence falls but house prices gain

29th Nov 2013 07:18

- Flat to modest start expected on FTSE- UK confidence shows surprise fall- UK house prices rise above expectationsCity sources predict the FTSE 100 will open around two points lower than yesterday's close of 6,654.47 after a quiet session yesterday as the US celebrated the Thanksgiving holiday. Markets will this morning be digesting the news UK consumer confidence registered a surprise decline in October. The Gfk index showed a fall to a seasonally adjusted -12, compared to -11 the previous month, which also revealed a fall. The figure had been expected to rise to -10. There has not been a month-on-month decline since mid-2011. The survey showed British consumers were concerned about their personal financial situations and felt less confident about making large purchases despite signs of an improving economy. In other important macro news, UK house prices rose at the fastest pace in more than three years in November, data from Nationwide revealed on Friday.Prices jumped 6.5% year-on-year, compared to the previous month's rise of 5.8% and the consensus forecast for a 6.2% increase.It was the biggest jump since July 2010 and vindicated Bank of England Governor Mark Carney's view that house prices are continuing to accelerate as he announced a scaling back of the Funding for Lending Scheme yesterday.The central bank is going to refocus the scheme, which helps increase lending to home-buyers and businesses, to focus solely on helping small firms that find it hard to borrow. Carney said the property market has picked up enough for such a move. "Although the growth in household loan volumes remains modest, activity is picking up and house price inflation appears to be gaining momentum," BoE Governor Mark Carney said in a letter to Chancellor George Osborne, who backed the move.The Governor, however, stressed that it has no power to stop the government's Help to Buy scheme, which has also provided a lift to the housing sector.In other economic data releases elsewhere, Eurozone inflation is anticipated to increase to 0.8% in November from 0.7% in October. Consumer prices in the bloc dropped sharply last month, prompting the European Central Bank to cut interest rates to 0.25% from 0.5%.In today's company news, Hammerson, the property development and investment company, has raised funds to repay existing debt and refinance upcoming bond maturities through the placement of seven-, 10- and 12-year notes. The group expected to raise a total of $443m, which will fund in two tranches. Rio Tinto said it plans to temporarily suspend alumina production at its Gove refinery in Australia as it is "no longer viable" in the current economic environment. The FTSE 100 company said it will focus on bauxite operations at Gove and is establishing a long-term plan for the business.Infrastructure, construction and support services group Carillion has been named as the preferred bidder to deliver a range of property services for a regeneration programme in Sunderland. The contract is worth at least £100m over the first eight years and potentially up to £800m over 20 years. It will focus on the redevelopment of key sites across the city.Halma has increased and extended its syndicated revolving credit facility with its existing core group of banks. The safety, health and environmental technology group's facility has been increased to £360m from £260m and the term extended to November 2018 from October 2016.