Housebuilders take comfort from rising property prices

A SURVEY showing UK house prices rose in May laid the foundations for gains across the housebuilding sector yesterday.

HOT PROPERTY Housebuilding shares are doing well HOT PROPERTY: Housebuilding shares are doing well

Taylor Wimpey and Persimmon firmed 2¾p to 32p and 18½p to 364p, Bellway added 9½p to 645½p, while Redrow was up 5¾p to 195¾p as investors took heart from the second positive reading by the Nationwide in the past three months.

“News that prices increased in May are likely to be taken positively by those looking to call a bottom to the current downturn,” said Panmure Gordon building analyst Rachel Waring.

But she reckoned conditions were likely to deteriorate for Britain’s builders over the summer, a cautious view shared by KBC Peel Hunt, whose main concern is the lack of supply of mortgage finance.

The continued weakness of the US dollar encouraged more buying of metals priced in the American currency by holders of other currencies . Positive US economic data fuelled demand for the likes of copper, hitting a three-week high. Platinum producer Lonmin topped the blue chip gainers list, up 111p to 1428p, Xstrata rose 34½p to 684p, Anglo American struck it 88p richer at 1777p, while copper producers Kazakhmys and Antofagasta were up 23½p to 690½p and 31p to 629p.

With the price of oil hitting a six-month high above $66-a-barrel, exploration giant BG Group flowed 49p north to 1128p and oil services group Amec improved 21p to 674½p. Dana Petroleum was 90p slicker to 1312p as Citigroup told clients to buy to a 1425p price target. The FTSE 100 Index closed 30.4 points higher at 4417.94.

Hedge fund manager Man Group was 8½p richer at 241¼p as it was included on a list of broker Merrill Lynch’s favourite financial stocks.

Banking heavyweights also prospered, with Barclays adding 10½p to 297½p, while Lloyds Banking Group and Royal Bank of Scotland firmed 3p to 68p and¾p to 38¼p.

Upbeat comments from broker Goldman Sachs helped sportswear retailer Sports Direct International and department store Debenhams enjoy mark-ups of 3½p to 83p and 2p to 92¼p.

Car dealer Pendragon accelerated 4¼p to 25½p as Jack Petchey, the activist investor and property developer who started out in the car business, sold down his 12 per cent holding to below 3 per cent.

On Wall Street, the Dow Jones closed up 96.53 at 8500.33 after gains for heavyweight energy stocks.

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