Last Week in London
This, although weakness was countered by upbeat company trading statements, enabling the market to close the week little changed.
Data from the Royal Institution of Chartered Surveyors showed house prices growing at their quickest pace in 1½ years in the three months to the end of April, with further increases predicted for the coming months.
The balance of surveyors reporting an increase in prices minus those experiencing a decline rose to 46% from 45% in the three months to the end of March, the highest since October 2002. As well as expecting values to continue to rise, the RICS has also forecast increasing sales in the summer.
Consumer price inflation accelerated in April as petrol and domestic heating oil costs rose, adding to pressure on the Bank of England to raise interest rates further. Consumer prices rose 0.4% in April, up from 0.2% in March.
From a year ago prices rose 1.2%, compared with a nine month low of 1.1% in March and expectations of a 1.3% rise.
The minutes of this month's Monetary Policy Committee meeting showed that Bank of England policy makers voted unanimously to raise the benchmark interest rate to 4.25% and said that it may be necessary to raise rates faster than financial markets expect.
The MPC also considered the possibility of a half point rise, which it believes may be necessary to help curb the rapid expansion of consumer, although they rejected the idea this time around as inflation is below target.
They also believe that there is "uncertainty" surrounding the impact on the economy of a larger than expected rate rise.
Data from the British Bankers Association showed mortgage lending rising in April by a record amount, reiterating the Bank of England's concern that consumers may be borrowing too much. Borrowing increased by £6.39bn last month, the most since at least 1997, after an increase of £5.96bn.
Total net lending to individuals increased by £7.39bn in April after a rise of £7.37bn the previous month, while credit card borrowing rose by £569m.
Mobile phone operator MMO2 (-1.8% to 94¼p) posted a fiscal second half profit, the company's first since being spun off from BT Group in 2001, after adding new customers and encouraging existing subscribers to spend more.
MMO2, ranked fourth in Britain by customers, is focusing on organic growth after rejecting a takeover offer from Dutch operator Royal KPN in February. The company is boosting margins by cutting costs and persuading clients to spend more by downloading music and sports videos.
BT Group (+5.2% to 181p), the UK's former telephone monopoly, reported an 82% decline in fiscal fourth quarter profit, with last year's number including the proceeds of an asset sale. BT additionally halted a decline in sales which had lasted for three quarters.
The company is countering a shrinking fixed line business and regulatory price cuts with high speed internet connections and computer services contracts, although with no wireless unit, BT is failing to match the growth rates of its European counterparts.
The sale of BT's wireless unit in 2001 and the disposal of its directories unit stripped the company of the growth it now seeks.
