Consumer outlook brightens

By Christina Fincher and Fiona Shaikh

LONDON (Reuters) - House prices jumped last month, retail sales notched up their best October in seven years and car imports leapt at their fastest rate since 1996 -- all suggesting a consumer-led recovery may not be far off.

However, the risks to the economy were underlined by Fitch Ratings agency which warned Britain was most at risk among major economies of losing its top-notch rating.

The economy looks set to return to growth in the fourth quarter of this year after suffering its longest recession since World War Two.

Policymakers have been hoping the weak pound could encourage an export-led recovery and help rebalance Britain's economy. Tuesday's data suggested consumers were leading the charge for now.

"It's all consumer positive, at least in the short term," said Brian Hilliard, chief UK economist at Societe Generale. "House prices are showing a strong recovery, retail sales are booming and the trade data is showing the impact of the car scrappage scheme."

A survey from the Royal Institution of Chartered Surveyors showed 34 percent more surveyors reported price rises in the three months to October than price falls. That was the highest since December 2006, when Britain's economy was booming and house prices were rising at a double-digit rate.

The British Retail Consortium said the value of like-for-like sales were 3.8 percent higher last month than a year ago. That was the highest monthly reading since April and the best October reading since 2002.

"With the strong correlation between housing and consumer spending, as well as the feedback from house prices to the quality of lenders' balance sheets and collateral, the housing upturn is a major plus for the economy," said Michael Saunders, UK economist at Citi.