Oil sinks, stocks buoyant, dollar mixed

Oil prices skidded lower on Tuesday dragging down energy stocks on otherwise buoyant equity markets, while the dollar was mixed and bonds sold off.

Unusually warm weather in the northeast United States has sharply reduced demand for heating oil, knocking crude prices.

US light crude OIL for February delivery was down 78 cents a barrel to $55.30. Brent crude fell 88 cents to $54.70.

The lower prices weighed on European energy stocks -- BP was off more than 2 percent -- but equities were generally gaining.

The FTSEurofirst 300 index was up 0.5 percent.

Earlier, Japan's Nikkei average rose 0.86 percent in part as expectations of an interest rate hike next week helped banking stocks post gains.

It ended up 146.18 points at 17,237.77. The broader TOPIX index was up 1.00 percent at 1,692.12.

On foreign exchange markets the dollar was slightly weaker against the euro at $1.3028, well away from six-week lows hit on Monday near $1.2970.

The dollar was up around third of a percent at 119.16 yen.

Euro zone government bond prices were under pressue from an upcoming welter of supply and by buoyant equities.

The interest rate-sensitive two-year Schatz yield was up 1.2 basis points at 3.919 percent and the 10-year Bund yield was up 1.6 basis points at 3.998 percent.

Savings to break through trillion pound mark

Household savings are set to break through the one trillion pound mark for the first time in 2007 ? the year that will see the return of the savings habit ? according to HBOS.

Money held on deposit is expected to rise by nearly 70 billion pounds throughout the year, outstripping the annual increase of the past four years, HBOS says in its latest economic forecast.

The savings ratio ? the percentage of disposable income saved rather than spent ? is forecast to rise to 6.2 percent in the fourth quarter of 2007 from 5.9 percent a year ago as household spending rises more slowly than income growth.

That will be the highest level since 2001 and above the average of 5 percent over the past five years.

The expected surge in savings follows a doubling in the value of household sector liquid assets over the past 10 years.

?Households are rediscovering the savings habit,? says Martin Ellis, chief economist at HBOS, Britain's largest mortgage lender and liquid savings provider.

?The saving ratio is expected to increase to its highest level for six years in 2007 ? comfortably above the average over the past few years.?

However, the bank expected house price inflation to ease to 4 percent in 2007 ? the smallest rise in house prices since 1995 and half the long-term average of 8 percent per annum since 1983.

The property market will slow in all regions, other than London, in 2007, it said. But despite the overall slowdown, there will not be any towns with an average price below 100 000 pounds at the end of 2007.

Northern Ireland is expected to record the highest house price rise for the second successive year, although growth is forecast to fall to 15 percent from 34 percent. London is in line to see the biggest increase in prices in England, at an average 8 percent, underpinned by a buoyant regional economy and the 2012 ?Olympic effect?.

The British economy is expected to deliver its 60th successive quarter of growth during 2007 -- the longest-running period of unbroken growth ever recorded and a record unmatched by any other developed nation.

Higher interest rates, greater pressure on household finances and subdued real earnings growth will constrain housing demand.