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3 years ago
FTSE gets housebuilder fillip on government building scheme
March 17, 2014 / 12:35 PM / 3 years ago

FTSE gets housebuilder fillip on government building scheme

3 Min Read

* FTSE 100 up 0.4 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
looked set to snap its longest losing streak in 2-1/2 years on
Monday after the building sector surged on a government plan to
pump more cash into a scheme to boost construction.
    The threat of sanctions between Russia and the West over
Crimea that has contributed to a 4.5 percent slide from the 2014
high for the FTSE 100 kept a dampener on the broader
market, after Crimea voted to quit Ukraine. 
    Persimmon led FTSE 100 gainers, rising 4 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. 
    Among other housebuilders, Barratt Developments,
Taylor Wimpey, Berkeley Group and Crest
Nicholson gained between 3 percent and 5 percent.
    "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.
    "But, also, inside London the international buyer, (who) is
pushing along the transactions and prices, now has confidence in
government support, so I think it's going to be positive for
Berkeley too," he said, noting that the scheme could boost those
companies' earnings by between 10 percent and 15 percent a year.
    The promise of better profits in the sector, which was one
of the best-performing year-to-date, helped the FTSE 100 add 0.4
percent to 6,553.58 points, bouncing from Friday's one-month low
and recouping a fraction of the 2.8 percent it shed last week.
     
    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 major violence
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 5 percent but remains
nearly 60 percent higher than at the start of the year.

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