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LONDON (Alliance News) - Housebuilder Redrow Tuesday became the latest housebuilder to say the UK housing market is reverting to more normal levels of transactions, as it reported an increase in profit and revenue for its recent full year, although it also warned of rising costs due to dwindling numbers of skilled workers to hire.

The company, which said pretax profit almost doubled in the full-year, said market conditions have returned to a more seasonal pattern of activity, meaning fewer people buying in the summer and more in the spring and autumn. This comes after Berkeley Group Holdings on Monday said the UK housing market has reverted to normal transaction levels from the high point witnessed in 2013.

The comments suggest that the Bank of England's efforts to cool the surging market earlier in the year by further toughening mortgage lending criteria is working.

Redrow is one of the UK housebuilders most benefitting from the UK government's mortgage financing scheme Help to Buy. However, it cautioned that now the boost from the scheme has settled down, its future growth will have to come from opening new sites rather than increasing the rate of sales from sites.

The message from the companies has been reflected in economic data.

UK construction activity grew at a faster pace in August, defying expectations of a slow down, results of a survey by Markit Economics and the Chartered Institute of Purchasing & Supply, or CIPS, showed. The Markit/CIPS construction purchasing managers' index rose to 64 in August, from 62.4 in July, well above the 61.5 expected by economists. This marked the fastest rate of increase since January and the second-strongest rate of expansion since the pre-recession peak of August 2007.

The improvement was led by housebuilding again, although the rate of expansion in the residential construction sector moderated somewhat to a three-month low. Civil engineering activity rose at the fastest pace since March and commercial construction activity continued to increase at a rate that was close to its fastest pace since the summer of 2007.

Input costs across the construction sector rose at the fastest rate since July 2011, the data showed, reflecting higher sub-contractor charges. Redrow Chief Executive John Tutte told Alliance News the company was facing a lack of skilled workers.

That will be of interest to the Bank of England as it deliberates on when to start raising interest rates. If that is being replicated in other sectors, then the slack in the economy that the central bank is using as a measure of economic improvement is being taken up.

There have now been 48,393 Help to Buy completions, 82% of which were by first-time buyers, the Department for Communities and Local Government said separately Tuesday. The scheme continues to account for only a small percentage of overall mortgage transactions: the mortgage guarantee part of the scheme has only accounted for 2.5% of total mortgages, while the equity loan part of the scheme has accounted for 4%.

Redrow said 1,023 private legal completions were made on its properties under the Help to Buy scheme in its last financial year, compared with 82 a year earlier. Redrow said a large proportion of these were first-time buyers and over half were in the north of England.

It posted pretax profit of GBP132.6 million for the year to June 30, up from GBP69.4 million a year earlier, as revenue rose to GBP864.5 million from GBP604.8 million.

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Markets: UK shares are slightly higher, buoyed by hopes for European Central Bank action later in the week and the UK construction PMI reading that came in ahead of economists' predictions.

The US futures indicate a higher open for Wall Street after Monday's Labor Day holiday. The DJIA, S&P 500 and Nasdaq Composite are all currently set to open up 0.3%.

FTSE 100: up 0.1% at 6,832.19
FTSE 250: flat at 15,949.49
AIM ALL-SHARE: up 0.2% at 780.39
GBP-USD: down at 1.6537
EUR-USD: down at 1.3115
GOLD: down at USD1,270.58 an ounce
OIL (Brent): down at USD101.80 a barrel
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Other Top UK Corporate News
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Tesco's new Chief Executive Dave Lewis thinks he will bring a fresh non-retailing perspective to the UK's biggest grocer, admitting in an interview with the Evening Standard late Monday that he is "wonderfully naive" about some of the challenges that face him. Lewis, who has been brought in from consumer goods giant Unilver PLC, paid tribute to former CEO Philip Clarke, calling him a great retailer. But he added that great retailing hasn't worked in the CEO job recently so a fresh perspective is what is required at Tesco.
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British Land and Development Securities said they have signed leases at their respective sites in Orpington and Hammersmith, London. FTSE 100-listed British Land said Metro Bank has signed for a 5,300 square foot unit on a 25-year lease at its Nugent Shopping Park in Orpington. Meanwhile, Development Securities in a joint statement with co-investor SWIP Property Trust said they have completed the final two lettings at 10 Hammersmith Grove to media company Fox International Channels Ltd and to tobacco firm Philip Morris International.
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Hammerson said it has completed the sale of its 50% stake in its last remaining office asset, 10 Grosvenor Street in Mayfair, London to its joint venture partner Grosvenor Fund Management's London Office Fund in a deal worth GBP54 million. The building is currently Hammerson's own headquarters, and staff will now relocate to a site in Kings Cross. The sale of the building completes Hammerson's disposal of its office portfolio, which has generated GBP690 million of funds which have been recycled into its retail-focused business including the acquisition of Victoria Quarter in Leeds.
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Polymetal International outlined its plans for a slew of its gold projects, confirming plans to proceed with the construction and development of the Svetloye gold project and terminating or slowing development at three other sites ahead of the acquisition of the Kyzyl project. The Russia and Kazakstan-focused precious metals producer said the forthcoming acquisition of the Kyzyl gold project in Kazakhstan has resulted in it having to re-prioritise its project pipeline in order to focus capital and management resources on key sites and maintain a robust leverage level.
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Johnson Service Group said that revenue and pretax profit rose in its first-half, leading the company to up its interim dividend as its textile rental division performed ahead of management expectations. In its half-year results for the six months to June 30, the textile services group said pretax profit was up 46% to GBP6.5 million, from GBP4.4 million the previous year, while revenue was up 5.7% to GBP101.6 million, from GBP96.1 million. The company raised its interim dividend by 25% to 0.5 pence per share from the 0.4 pence per share paid last year.
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AIM MOVERS
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Sefton Resources shares have jumped by a quarter after it made a required forebearance payment of USD148,000 along with interest payments to its bank, utilising loan funds provided by Hawker Energy LLC, a subsidiary of Sara Creek Gold Corp. Union Jack Oil, Europa Oil & Gas, and Egdon Resources are all higher after they said the Wressle-1 conventional exploration well they are drilling to the east of Scunthorpe had found hydrocarbons. DCD Media is another gainer after it agreed terms to sell its Glasgow-based television production business Matchlight to the unit's management, although the completion of the deal is still subject to a number of conditions it didn't set out. Kibo Mining is up after a review at the Imweru project in Tanzania demonstrated sufficient gold resources at the site to support production and it said it has the potential to start producing gold from the site in the near term. Quindell is another gainer after it said it is acquiring the RAC's stake in the two companies' telematics joint venture, Connected Car Solutions, just months after they inked the deal to distribute combined connected car products. Vislink is down even though it posted a slight rise in pretax profit for the first half as it offset a revenue fall by cutting costs in its hardware unit. It said its software business is trading ahead of expectations for the year, a performance it expects to continue in the second half, but it's facing an uncertain broadcast market and was hit by delayed surveillance contracts in its hardware division. It said the hardware unit was improving after it restructured it.
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Top Economics And General
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The commission asked by the UK government to review the country's needs for additional airport capacity confirmed that it will not be considering the proposal put forward by London Mayor Boris Johnson for a new airport in the Thames Estuary, saying it would be too expensive and would cause "huge" economic disruption. In a statement, the Airports Commission said it had looked at the feasibility of an inner Thames estuary airport in detail and concluded that substantial disadvantages collectively outweigh the potential benefits. It said it hadn't been persuaded that a very large airport in the Thames is the right answer to London and the UK's needs, and it believes a hub airport should be part of an effective system of competing airports to meet the needs of a "widely spread and diverse market like London's".
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Eurozone producer prices decreased in July after recovering in June, data published by Eurostat showed. Producer prices fell 0.1% in July from June due to a 0.6% drop in energy prices. In June, producer prices climbed 0.2%, which was the first monthly rise in 2014. Year-on-year, producer prices declined 1.1%, which was faster than the 0.8% fall in June. Both annual and monthly figures for July matched economists' expectations.
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Russia strongly criticized plans by Ukraine to give up the country's non-aligned status, and join NATO. "This idea by the government in Kiev is an attempt by the party of war to disrupt the attempts to find a political solution," Foreign Minister Sergei Lavrov said in Moscow, the Interfax news agency reported. Lavrov added that "it is a pity that the US, some EU member states and NATO officials are playing up the idea."
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The US military conducted an operation against Islamist al-Shabaab militants in Somalia, the Pentagon announced Monday, without providing further details. The announcement came nearly a week after the Somali government said it would launch a new offensive against the al-Qaeda-linked group, and days after an al-Shabaab attack in Mogadishu left 15 people dead over the weekend.
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Israel faced criticism for what was being described as the biggest appropriation of West Bank land in some 30 years. The military's Civil Administration on Sunday declared as "state land" 4,000 dunams (about 400 hectares) of territory south of Jerusalem. It said it acted on the instructions of the government. Israel Radio said the move was preparation for future expansion of the Gush Etzion settlement bloc. United Nations Secretary General Ban Ki-moon voiced "alarm" at the announcement.
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Iranian Foreign Minister Mohammad Javad Zarif is "quite optimistic" a deal can be struck with the West on his country's nuclear programme, despite a new round of sanctions imposed by the US, he said Monday. The US announced a series of measures Friday targeting entities and individuals who Washington alleges are helping Iran circumvent international sanctions and expand the country's arms proliferation programme.
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Afternoon Watchlist (all times British Summer Time)

14:45 US Markit Manufacturing PMI
15:00 US Construction Spending
15:00 US IBD/TIPP Economic Optimism
15:00 US ISM Manufacturing PMI
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Wednesday's Key UK Corporate Events

Genus Full Year Results
Hargreaves Lansdown Full Year Results
Safestore Holdings Trading Update
A&J Mucklow Full Year Results
Ashtead Group Q1 Results

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Wednesday's Key Economic Events (all times British Summer Time)

00:01 UK BRC Shop Price Index
02:00 China Non-manufacturing PMI
02:35 Japan Markit Services PMI
02:45 China HSBC China Services PMI
08:50 France Markit Services PMI
08:55 Germany Markit Services PMI
09:00 EU Markit Services PMI
09:00 EU Markit PMI Composite
09:30 UK Markit Services PMI
10:00 EU Retail Sales
12:00 US MBA Mortgage Applications
13:55 US Redbook Index
14:45 US ISM New York index
15:00 US Factory Orders
19:00 US Fed's Beige Book
n/a US Total Vehicle Sales
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