UPDATE 1-FTSE gets housebuilder boost on government homes scheme

Mon Mar 17, 2014 2:39pm EDT

* FTSE 100 up 0.6 pct
    * Snaps longest losing streak since 2011
    * Construction groups get Help to Buy boost
    * Ukraine crisis keeps investors wary


    By Simon Jessop and Francesco Canepa
    LONDON, March 17 (Reuters) - Britain's top share index
snapped its longest losing streak in 2-1/2 years on Monday as
the building sector surged on a government plan to pump more
cash into a scheme to boost construction.
    Potentially profit-sapping Western sanctions on Russia over
Crimea after voters there opted to quit Ukraine, capped index
moves. It meant intraday highs hit soon after strong U.S.
manufacturing data failed to hold.
  
    Persimmon was among top FTSE gainers, rising 3.7
percent after British finance minister George Osborne said on
Sunday he would extend a scheme to encourage housebuilding and
develop a new town close to London.       
    "It is mainly being used outside London by first-time
buyers, so I think it's going to be positive for names like
Taylor Wimpey, Persimmon and Barratt," Ian Osburn, an analyst at
Cantor Fitzgerald, said.
    Among other housebuilders, Barratt Developments,
Taylor Wimpey and Crest Nicholson gained between
2 percent and 4 percent.
    "If anything I would have expected the reaction to be even
more positive," a second sector analyst said, as it kicked
uncertainty about how the government will exit its support to
the sector "into the long grass".
    The promise of better profits in the sector, one of the
best-performing this year, helped the FTSE 100 add 0.6
percent to 6,568.35 points, bouncing off Friday's one-month low
after a week in which it fell 2.8 percent. 
    In spite of Monday's gains, it remains down 4.3 percent on
the year, with much of that drop coming in the last two weeks.  
  
    The UK blue-chip index had fallen for six straight sessions,
its longest losing streak since November 2011, leaving it
"oversold" on its seven-day Relative Strength Index, a technical
momentum indicator.
    Qualified relief at the lack of any upsurge in violence
linked to the referendum in Crimea underpinned the FTSE's
bounce, said Markus Huber, senior trader at Peregrine & Black,
although near-term gains would depend on the scale of
anticipated sanctions.
    In a sign of that relief, the cost of insuring against
future swings on the FTSE, as measured by the FTSE 100
Volatility index, fell about 10 percent - though it
remains more than 50 percent higher than at the start of the
year.
    Colin McLean, fund manager at SVM Asset Management, said he
considered the recent market falls "a dip to buy on".
    "I think Europe, at least, and probably the U.S., are still
in a bull market and will make new highs this year.
    The FTSE 100's year to date high is 6,867.42 points.
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