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* FTSE 100 up 0.4 pct
* Housebuilders rally on UK PM Help To Buy extension
* Airlines rise after Monarch collapses
By Kit Rees
LONDON, Oct 2 (Reuters) - The UK’s top share index touched a fresh three-week peak on Monday as homebuilders rallied thanks to an extension of a government housing scheme while airlines and miners also gained.
The blue chip FTSE 100 index was up 0.4 percent at 7,404.26 points by 0853 GMT, slightly outperforming a broadly positive European market.
Housebuilders Persimmon, Barratt Developments and Taylor Wimpey were among the biggest gainers, jumping 2 percent to 3.6 percent after UK Prime Minister Theresa May pledged 10 billion pounds ($13.4 billion) of extra funding to help people buy new homes.
Persimmon also hit a record high.
“That’s a clear positive, and I think (the extension) should actually benefit, more so, the more diversified builders,” said Ken Odeluga, market analyst at City Index, said.
“To the extent that we could get something which resembles anything like a soft Brexit, this would forestall much of the feared impact on the sector,” Odeluga added.
Housing-related stocks were hit particularly hard by the shock Brexit vote in 2016, as the sector is closely-linked to the state of the UK economy.
Many of those stocks have since recouped their post-Brexit losses, however.
Elsewhere budget airline easyJet jumped 3.6 percent after peer Monarch Airlines went bust.
This spurred a rally across European carriers on the prospect of scooping up bookings from customers switching airlines. Shares in British Airways operator IAG also rose 1.7 percent.
“(Monarch’s failure) means fewer seats to fill sector-wide ... This should mean Ryanair and EasyJet can comfortably improve load factors, even if the reputation of the former has suffered of late,” Neil Wilson, senior market analyst at ETX Capital, said in a note.
“This should be positive for margins despite pricing pressures.”
A rise among mining stocks also helped the index, with shares in Rio Tinto, Glencore and Anglo American rising 1.2 percent to 1.8 percent thanks to a buoyant copper price.
However, outside of the blue chips, shares in NEX Group dropped 7 percent after the financial broker flagged increased spending at its post-trade and information services operations, which would dent that division’s profitability.
Reporting by Kit Rees; Editing by Keith Weir