Housebuilder and retail stocks boost FTSE

Housebuilders and retail stocks cheered the London market today after an encouraging series of trading updates today.

Primark owner Associated British Foods and Barratt Development ensured the FTSE 100 Index rose by as much as 85.5 points at one stage, but this proved short-lived after Merrill Lynch followed other major US banks in reporting hefty sub-prime related write-downs.

As a result, the Footsie slipped back below the 6000 barrier, off 18.4 points at 5924.5 by lunchtime.

AB Foods led the Footsie risers board, up 8% or 60.5p to 835.5p, after its Primark operation continued its strong run of growth over Christmas.

Analysts estimated Primark’s like-for-like sales growth at a better-than-expected 4%, defying thoughts it may have followed the lead of Next and Marks & Spencer with disappointing Christmas trading.

Housebuilder Taylor Wimpey also rose 8% after rival Barratt Developments posted better-than-expected trading figures and said it continued to trade satisfactorily. Taylor shares were 6.25p higher at 837.5p, while Barratt - recently relegated from the FTSE 100 Index – stood 35.5p higher at 398.25p.

Charles Church owner Persimmon, which is a blue-chip stock, gained 31.5p to 761p.

Property firms joined in the recovery with British Land ahead 40.5p at 961p and Hammerson 32p stronger at 1055p, a rise of 3%.

Among other companies reporting today, Argos owner Home Retail Group was up more than 1% – ahead 4p at 275.25p after latest trading figures helped dampen fears over prospects in a tougher retail climate. It said it expected profits to be towards the top end of expectations.

While market sentiment was hit by the Merrill Lynch gloom, shares in the banking sector held firm. Halifax Bank of Scotland posted one of the biggest gains – up 9.5p to 639.5p – as it recovered losses from earlier in the week.

On the fallers board, miners endured a difficult session after a tough session yesterday when fears over a global slowdown led doubts over commodity demand.

Vedanta Resources led the declines, off 97p at 1788p and Anglo American followed with a 5% fall, down 125p at 2589p.

In the FTSE 250 Index, retailer HMV rose 5%, or 5.75p to 106.75p after the music retail chain and Waterstone’s owner delivered a 9.4% jump in like-for-like sales. Kesa Electricals was 9% higher – up 16.75p to 200.5p – after it impressed analysts with a like-for-like sales gain of 0.7% for UK chain Comet.