FTSE under pressure from housebuilding stocks

UK housebuilders and banking stocks were under pressure today after the Halifax said house prices fell by 2.5% last month.

The declines for the likes of Persimmon and Barclays caused the FTSE 100 Index to decline 52 points to 5962.8 by mid-morning, ending a recent rally that has added 300 points to the top flight index in a week.

Fears over the housing market, following the biggest monthly dip in prices since 1992, fuelled nerves surrounding property stocks and those firms with exposure to the UK consumer.

Charles Church housebuilder Persimmon felt the pressure most with a decline of 4%, or 27.5p to 678.5p. FTSE 250 counterparts Bellway and Barratt Developments were down 45.5p to 795p and 20p to 374.5p respectively.

Halifax Bank of Scotland fell 20.5p to 539.5p, while in the retail sector Next dipped 36p to 1190p and Argos owner Home Retail slipped 9p to 263.75p.

One of the biggest gains of the session came from BT after the telecoms firm announced the earlier-than-expected departure of chief executive Ben Verwaayen. Analysts welcomed the succession plan however, with shares up 2.25p to 232p after BT said retail boss Ian Livingston would take the helm in June.

Elsewhere, a run of gains for British Energy came to an end with a fall of 9.5p to 704p as investors paused for breath after speculation about a joint bid involving Centrica and any one of several European utility firms.

And a fine of £35.8m (€45m) for Severn Trent failed to derail its share price, even though payment for the Ofwat punishment for deliberately providing false information and poor customer service will come from shareholder funds.

Analysts expressed relief that matters relating to previous poor performance were now largely out the way, clearing the path for a possible takeover. Shares were higher for a time, but later stood 1p lower at 1443p.