* Housebuilder stocks gain after modest BoE measures
* Hopes of a rate hike in coming months kept alive
* Pound slips a little against dollar after U.S. data
By Jemima Kelly
LONDON, June 26 Sterling rose to near
six-year-highs against the dollar on Thursday and housebuilding
stocks gained after Bank of England measures to cool Britain's
housing market did not shift interest rate expectations.
The BoE's risk watchdog, the Financial Policy Committee
(FPC), sought to slow a housing market that many worry is once
again overheating by toughening mortgage affordability tests and
announcing a cap on home loans.
But the macroprudential measures announced in the FPC's
twice-yearly financial stability report were not as aggressive
as some had feared. Tougher action might have increased
speculation the bank would hold off for longer than previously
thought in raising borrowing costs from current record lows.
The FPC's measures sent sterling to a day's high against the
dollar of $1.7040, before retreating to $1.7014 in the
afternoon after U.S. data for May showed the largest annual rise
in spending on personal consumption since October 2012.
The euro fell by almost half a percent against the pound to
79.87 pence, having hit a low of 79.82 as BoE
Governor Mark Carney spoke at a news conference following the
FPC report's release.
"The main concern for sterling traders was whether the
macroprudential norms would impact interest rate hike
expectations," said Nawaz Ali, an analyst at Western Union.
"Clearly they have not, much to the relief of traders. These
measures do not alter the MPC (Monetary Policy Committee) debate
on hiking interest rates."
Gilt yields rose across the two-, five- and 10-year
maturities as markets digested the BoE's measures.
Short-sterling interest rate futures <0#FSS:> fell, pointing
to a slight increase in expectations for an earlier rate hike by
the BoE. Its main rate is now 0.5 percent.
Housing is at the centre of the debate over whether
Britain's economy is really growing more durably and will in
time generate more pressure on wages and inflation, which was at
a 4 1/2-year low in May.
If the recovery in economic data over the past year is due
largely to increased house prices in a handful of key markets -
chiefly London - and related borrowing, it may not represent the
sort of longer-term recovery that would warrant higher rates.
Carney said he expected momentum in the housing market "to
continue for the next year or so" and added that it was not the
FPC's role to control house prices. That helped push shares in
British housebuilders, including Barratt Developments
and Persimmon, more than 5 percent higher.
Although the governor said the central bank had reached "the
limit of (its) tolerance" on projected increases in mortgage
debt, some argued its actions were not tough enough.
"Many will argue today's measures don't go far enough," said
Tom McPhail, head of pensions research at financial services
firm Hargreaves Lansdown. "Mark Carney stressed that if someone
could get a mortgage yesterday they could get one today."
(Additional reporting by Anirban Nag and Andy Bruce; Editing by