The pound fell against the dollar, snapping a four-day gain, after an industry report showed U.K. home prices stalled last month and a gauge of demand declined. Sterling weakened for a third day versus the yen as property researcher Hometrack Ltd. said “downward pressure� will remain on house values amid a squeeze on consumers. The U.K. currency was little changed against the euro as European Union leaders prepared to meet today for their first summit of 2012. Gilts advanced as investors sought the relative safety of U.K. government debt. The pound declined 0.4 percent to $1.5666 at 9:06 a.m. London time, paring this month’s advance to 0.8 percent. The U.K. currency dropped 0.4 percent to 120.13 yen, and traded at 83.90 pence per euro. Sterling has depreciated 1.1 percent in January, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar declined 2 percent, and the euro dropped 0.5 percent. Home prices were unchanged in January, London-based Hometrack said in an e-mailed report. From a year earlier they fell 1.6 percent. The underlying trend is one of “tightening supply and weakening demand,� the company said. The 10-year gilt yield fell three basis points, or 0.03 percentage point, to 2.04 percent. The 3.75 percent bond due September 2021 rose 0.265, or 2.65 pounds per 1,000-pound ($1,567) face amount, to 114.845. Two-year yields dropped two basis points to 0.36 percent. Gilts have handed investors a 0.5 percent loss this year, lagging behind German government bonds, which declined 0.4 percent, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. The U.K. plans to auction as much as 7.25 billion pounds of debt this week. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

Source