By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- U.K. stocks pulled lower Monday, with
housing shares hit by possible changes to mortgage rules, but
overall losses were somewhat limited by a rise in mining issues
following data from the key Chinese market.
The FTSE 100 index fell 0.2% to 6,814.84, with real-estate
stocks down following reports that the Bank of England this week
will propose measures aimed at cooling the pace of growth in the
country's booming housing market.
Demand for loans to buy houses "increased significantly" in the
second quarter and lenders foresee demand increasing further over
the next three months, according to results released Monday from a
Bank of England survey on credit conditions.
Shares of home builder Barratt Developments PLC fell 3.4%,
Persimmon PLC lost 2.1% and property developer British Land Co.
lost 1.5%. Off the FTSE 100, Taylor Wimpey PLC gave up 1.9%.
The central bank's Financial Policy Committee on Thursday is
expected to outline recommendations on how to slow the housing
market. Last month, BOE Gov. Mark Carney said the biggest risk to
the U.K.'s economic recovery is the jump in housing prices and the
impact of increased borrowing by home buyers. The central bank has
also signaled it will raise interest rates later this year.
Recommendations by the FPC may include paring the government's
Help-to-Buy housing loan program and tightening requirements
related to loan-to-value and loan-to-income metrics, said analysts
at Brown Brothers Harriman. "Given the institutional and foreign
participation in the U.K. property market the impact of such
macro-prudential steps will impact the middle class domestic demand
more than other market segments," they said.
Banking shares also struggled, with Lloyds Banking Group down
1.1%, Royal Bank of Scotland off 1.9% and HSBC Holding Ltd. lower
by 0.5%.
Meanwhile, shares of Shire PLC (SHPGY) fell 1% as the drug maker
outlined its view that its product portfolio and pipeline will
reach $6.5 billion in sales by 2016 and $10 billion in sales by
2020. Shire last week rejected an acquisition offer from U.S. rival
AbbVie Inc. (ABBV), saying the bid undervalued the company.
Mining shares gained following a better-than-expected result for
HSBC's June preliminary manufacturing report from China, a major
buyer of natural resources. Rio Tinto PLC rose 1.7%, BHP Billiton
PLC advanced 1.8% and Anglo American PLC tacked on 1.3%. rose
1.4%.
The headline number of the "flash" version of HSBC's China
manufacturing Purchasing Managers' Index rose to 50.8 from a final
reading of 49.4 in May, marking the first time since December the
index indicated growth.
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