U.K. Pound Rises After Report Shows Rising Factory Prices

Dec. 10 (Bloomberg) -- The pound advanced against the dollar and the euro after a report showed U.K. factories raised prices at the fastest annual pace since 1991 in November, adding to inflation pressures.

The U.K. currency was also buoyed versus the dollar on speculation the Federal Reserve will reduce its benchmark interest rate a quarter-percentage point tomorrow. Manufacturing- output prices rose 4.5 percent from a year ago, after a 3.8 percent gain in October, the Office for National Statistics in London said.

``Sterling has gained some attraction today as U.K. economic releases have come in on the strong side,'' said Ian Stannard, senior currency strategist at BNP Paribas SA in London.

The pound rose 0.8 percent to $2.0452 by 5:08 p.m. in London, from $2.0304 on Dec. 7. Against the euro, it climbed 0.4 percent to 71.93 pence, from 72.21 pence.

Bank of England Policy makers cut the benchmark interest rate for the first time in two years on Dec. 6 to curb economic damage from higher credit costs. The central bank said then ``upside risks'' to prices remain as companies absorb higher energy and food costs.

A separate report today showed annual house-price gains accelerated in October.

House Prices

Home values climbed 11.3 percent from a year earlier, compared with 10.8 percent in September, the Department for Communities and Local Government said. Average prices were little changed on the month, rising to 220,195 pounds ($449,000) from 220,111 pounds in September.

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