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INSTANT VIEW 3-UK mortgage approvals and PMI weaker than expected

LONDON, Oct 1 (Reuters) - Activity in the British manufacturing sector shrank more than expected in September as export orders fell and costs soared, a survey showed, raising the risk that the economy will falter after a rebound over the past few months.

The Bank of England also released the following data for consumer credit and M4 money supply on Monday.

Following are highlights of the BoE and Markit/CIPS manufacturing PMI data, and economists' reaction.

KEY FIGURES FROM MARKIT/CIPS PMI SURVEY

(Previously announced data in brackets)

SEPT AUG JULY F'CAST Manufacturing headline index 48.4 49.6 (49.5) 45.1 49.0 New orders index 50.6 50.2 41.9

- New orders index highest since March

NUMBER OF MORTGAGE APPROVALS AUG JULY FORECAST

47,665 47,556 (47,312) 49,000

LENDING TO INDIVIDUALS (CHANGE IN BLN STG):

AUG JULY FORECAST Total net lending -0.4 0.6 (0.9) n/f

Secured on dwellings -0.3 0.9 (1.1) 0.5

Consumer credit -0.1 -0.2 (-0.2) 0.1

- of which credit card UNCH -0.1 (-0.1) n/f

KEY POINTS

- Steepest fall in total net lending since July 2010

- Sharpest fall in mortgage lending since Dec 2010

- Biggest annual increase in M4 excluding intermediate other financial companies since Q1 2009

CHRIS WILLIAMSON, MARKIT:

"The UK manufacturing sector has lost momentum again at the end of the third quarter, with firms suffering the double blow of falling output and rising costs.

"After an initial rebound since activity was hit by the extra holidays for the Queen's Diamond Jubilee in June, a downward trend in the rate of output growth is again evident.

"The survey data are consistent with manufacturing output falling sharply, at a quarterly rate in excess of 1 percent in September. At that pace, the sector could dampen economic growth severely and keep the economy in recession."

ANNALISA PIAZZA, NEWEDGE STRATEGY

On manufacturing PMI: "The outcome is weaker than anticipated and it suggests that the UK economy remains very fragile in Q3. The improvement seen in August failed to consolidate as the country still suffers from spill-over effects from the euro area. Exports remain extremely sluggish, affecting the manufacturing sector.

"Looking at the average of Q3 PMI data, the picture is rather depressing. Indeed, the index is nearly 0.5 point lower than in Q2, when the UK manufacturing sector was badly affected by the Jubilee long weekend."

"We rule out that the sector will return on a sustainable upward trend anytime soon."

(Reporting by UK economics team)

((david.milliken@reuters.com; +44 20 7542 5109; Reuters Messaging: david.milliken.thomsonreuters.com@reuters.net))

Keywords: BRITAIN ECONOMY/