By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- Stocks in London ended higher Friday,
with home builders lifted after upbeat analyst comments about the
sector.
The FTSE 100 index rose 0.3% to 6,757.77, but ended the week
with a loss of 1%.
Friday's advance was led by a 3.5% rise for TUI Travel PLC after
the travel group said it will merge with TUI AG, its German
majority shareholder, in an all-share merger.
Shares of home builder Barratt Developments PLC rose 3.2% and
Persimmon PLC gained 1.5% after UBS retained its positive view on
the home-construction sector despite policy concerns.
Housing stocks moved higher Thursday after the Bank of England
outlined measures aimed at cooling the U.K.'s housing boom. The
"recommendations to limit high loan-to-income lending and impose
more stringent affordability stress-testing was a sensible, but
relatively mild initial step to curb potential future excesses in
the housing market," said UBS analysts.
But an improving U.K. economy, historically low costs of
mortgage financing and political support for new construction are
still in the housing sector's favor, they said.
Off the benchmark, housing developer Taylor Wimpey PLC rose
3.6%.
Also ending higher was Rolls-Royce Holdings PLC . The shares
picked up 2.2% after a Reuters report that Airbus Group is near a
decision to upgrade its A330 aircraft with engines made by
Rolls-Royce.
Shares of Barclays PLC edged up 0.5%, paring heftier gains. They
dropped 6.5% on Thursday to a 19-month low on U.S. legal problems.
Reports said Barclays Chief Executive Antony Jenkins said in a
staff memo Thursday that the bank will conduct an internal probe,
following accusations of dark-pool fraud in a lawsuit filed by the
New York Attorney General.
U.K. stocks on Friday held to gains after the Office of National
Statistics kept its estimate of first-quarter growth in gross
domestic product at 0.8%, meeting expectations for the
quarter-over-quarter figure. Growth on an annualized basis was
reduced to 3% from 3.1%.
The pound (GBPUSD) briefly dipped following the report, but
stayed around the $1.70 level. It was buying $1.702 per dollar,
compared with $1.6983 late Wednesday.
On Friday, Bank of England Governor Mark Carney told the BBC
that returning to "old normal" level of interest rates of 5%
appeared unlikely in the medium term, as economic growth still
faces challenges including higher levels of household debt. He
suggested that rates would be around 2.5% by 2017.
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