1:00AM New York, 5:00PM London - U.K. mortgage approvals fall in March. HBOS launches £4 billion rights issue. Governor King was reappointed to the Bank of England.

Stocks in London fell despite gains by BP and Royal Dutch Shell first quarter profit beat analyst expectations.

Market sentiment

In London trading FTSE 100 fell 0.02% or 1 to 6,089.40.

Of the 102 FTSE 100 stocks 21 gained, 80 declined and 1 was unchanged. BP Plc led advancers in the index shares with a rise of 5.96% after first quarter profit increased 63% to $7.62 billion.

U.K. mortgage approvals decline in March

The Bank of England reported today that U.K. banks granted 64,000 loans for house purchase in March as compared with 72,000 in the previous month. Market watchers previously expected a decline to 66,000.

Also net lending of homes plummeted to a three year low of £6.9 billion from £7.3 billion the previous month, while the value of mortgages granted by customer-owned lenders declined to £2.9 billion.

As the value of personal loans and overdrafts fell by more than half, net consumer credit declined to £1.2 billion in March from £2.3 billion a month earlier.

HBOS launches £4 billion rights issue

HBOS plans to launch a right issue to raise £4 billion net of expenses to strengthen its capital base.

The report further notes that the rights issue will be on the basis of 2 ordinary shares for every 5 ordinary shares at 275 pence per share and a reduction in dividend payout ratio to 40%.

Group Chief Executive Andy Homby said, “We are planning for a more challenging environment ahead and the proceeds of the rights issue should ensure that we benefit from strong rations even if the macroeconomic environment deteriorates further.”

Britain inflation to rise above 3% next year

The Bank of England Governor Mervyn King told Parliament’s Treasury Committee today in a hearing to confirm his appointment as governor for a second term that Britain’s inflation rate will rise above 3% next year, according to local media reports in London. King added that he expects consumer spending to cool, though retail sales have been resilient.

During today’s hearing King’s reappointment was unanimously approved.

Gainers & Losers

BP Plc led advancers in the FTSE 100 stocks with a rise of 5.96% followed by increases in Royal Dutch Shell-B of 5.82%, in Royal Dutch Shell-A of 5.26%, in Shire Plc of 3.10%, and Amec Plc of 1.80%.

BP Plc and Royal Dutch Shell rose after the companies posted profits that beat analyst estimates.

In particular, BP Plc and Royal Dutch Shell reported today that first quarter profit increased 63% to $7.62 billion and 25% to $9.08 billion respectively.

Kazakhmys Plc led decliners in the FTSE 100 stocks with a fall of 4.46% followed by losses in Persimmon Plc of 3.57%, in Wolseley Plc of 3.50%, in ICAP Plc of 3.42%, and Home Retail Group of 3.38%.