FTSE: Pressure comes from housebuilding and retail sectors

A further round of sell recommendations from brokers cranked up the pressure on shares in the housebuilding and retail sectors today.

Casualties on the high street included Next, which fell 6% in the FTSE 100 Index, while jeweller Signet and Comet owner Kesa Electricals were impacted in the second tier.

Housebuilders continued their slide, but stronger energy stocks meant the FTSE 100 Index held positive territory with a gain of 22 points to 5849.3 by mid-morning.

Banks also did their best to prop up the market, with Halifax Bank of Scotland ahead 6.5p to 298.5p after a reassuring trading update from Royal Bank of Scotland eased nerves ahead of a HBOS’s £4bn (€5bn) rights issue.

RBS eased 5.25p to 228p, even though it said it was trading in line with expectations.

Persimmon moved in the opposite direction, down 7% or 27.25p to 360.25p, after its price at the close of trading last night made it a certainty for relegation to the FTSE 250 Index. Investors were further spooked when Merrill Lynch downgraded six housebuilders, echoing concerns issued by Goldman Sachs and Dresdner Kleinwort analysts earlier this week.

Barratt Developments and Taylor Wimpey again took the brunt of the sell-off, amid fears the pair will have to turn to shareholders for a cash boost. Barratt shed another 25% – or 23.25p to 68.25p – meaning its share price has halved since Monday morning. Taylor Wimpey eased 13.25p to 51.75p and Redrow fell 16.25p to 149.25p.

A review of the retail sector by Citi meant Next fell 64p to 1033p in the top flight, while Kesa was down 11% or 20.75p to 169p, Signet off 2.5p at 53.75p and Debenhams 5p lower at 52p. Issuing a number of sell recommendations, Citi said consumer demand forecasts pointed to a weak 2008 and weaker 2009.