SHARES STRONGLY UP/DOWN this week 26/12/05 (Master RSI)

Pound steady after further positive UK housing news

LONDON (AFX) - The pound was steady as further positive news from the UK's
housing market diminished expectations of any marked interest rate reductions
next year from the Bank of England.
In its monthly survey of the sector, Hometrack said the average house price
increased by 0.1 pct in December from the previous month. That was the first
time in 18 months that house prices have increased. Over the year, prices were
1.6 pct lower.
Hometrack's survey comes in the wake of anecdotal evidence of a strong
performance on the UK's high streets in the crucial run-up to Christmas.
That was evident in figures yesterday from department store John Lewis. It
reported that sales in the month before Christmas were up 11 pct on last year.
"Further evidence of stability in the housing market and solid retail
activity could prompt a rethink of MPC easing risk now priced in, allowing the
euro to retreat sharply against the pound," said UBS analyst Daniel Katzive.
Most analysts credit the improved housing and consumer picture to the Bank
of England's decision to cut its key repo rate a quarter point in August to 4.50
pct, its first interest rate reduction in over two years.
Elsewhere the dollar was slightly lower in thin post-Christmas trade despite
expectations of a further improvement in US consumer confidence in December.
"The US December consumer confidence index will be the highlight
of the day," said CIBC World Markets analyst Audrey Childe-Freeman.
Analysts expect the December consumer confidence index from the Conference
Board to increase to 102.6 from 98.9 in November, and further cement
expectations that the US Federal Reserve will continue raising the cost of
borrowing for some months to come.
The Fed's rate-setting body meets next on Jan 31 to consider a 14th
consecutive quarter-percentage point increase in the federal funds target rate
to 4.50 pct.
Apart from recent falls, the dollar has been buoyed for most of this year,
following a three-year downturn, by a growing focus on interest rate
developments around the world. Over the previous three years, structural
considerations were at the fore.
Those structural concerns were eased somewhat recently by the news the US
attracted more capital inflows than it required to finance its swelling trade
gap.
Earlier this month, the Fed lifted the benchmark rate by a quarter point to
4.25 pct but omitted to say in its accompanying statement that monetary policy
remains accommodative.
The softer rhetoric was taken to mean that the rate hiking cycle in the US
may be nearing its end -- a factor that weighed on the dollar.
Meanwhile, the European Central Bank is expected to raise interest rates
again in the coming months on firmer economic news out of the 12-nation currency
zone, particularly from Germany, the euro zone's largest economy.
The ECB raised its key refi rate a quarter point to 2.25 pct earlier this
month, its first increase in over five years.

London 1223 GMT Singapore 3.09 pm (0709 GMT)
US dollar
yen 117.21 down from 117.22
sfr 1.3067 down from 1.3115
Euro
usd 1.1923 up from 1.1878
stg 0.6861 up from 0.6851
yen 139.77 up from 139.24
sfr 1.5578 up from 1.5577
Sterling
usd 1.7377 up from 1.7335
yen 203.70 up from 203.14
sfr 2.2707 down from 2.2727
Australian dollar
usd 0.7298 up from 0.7293
stg 0.4199 down from 0.4207
yen 85.54 up from 85.500