Britain’s top share index edged lower on Friday after sharp gains in the previous day, with housebuilders losing ground following a cautious outlook towards the sector and as investors avoided strong bets ahead of US jobs data.
The blue-chip FTSE 100 index was down 0.1 per cent at 6,566.12 points by 0906 GMT, after surging more than 2 per cent the previous session following a jump in retailer Tesco’s shares on the back of restructuring plans.
The broader index was pressured by a drop in shares of house building companies, with the Thomson Reuters UK Homebuilding index falling 3.8 per cent on a cautious sector note from Jefferies, traders said.
Negative newsflow on UK mortgage approvals, housing transactions, weak house price data and lower GDP growth will lead to share price weakness in the residential sector in the first quarter of 2015, Jefferies said in a note.
Taylor Wimpey, Barratt Developments and Persimmon, down between 3.8 and 5.4 per cent, were the top decliners in the FTSE 100, while midcaps Bovis Homes , Berkeley, Bellway and Redrow fell more than 2.5 per cent.
“(The) UK housing market continues to slow, with tighter mortgage rules and affordability constraints as well as the prospect of a rate rise making investors cautious,’’ Mike van Dulken, head of research at Accendo Markets, said.
“While UK stamp duty reforms are going to help sellers not buyers, supply vs demand is also expected to improve, keeping pressure on prices.’’
Investors were also cautious ahead of US non-farm payrolls data, due later in the session. Employers probably added 240,000 jobs to their payrolls last month after November’s outsized 321,000 increase, according to a Reuters survey.
“Job creations give the Fed a more solid footing from which it can raise interest rates. If the numbers are much better than expected, then we might see a further squeeze in shares on the downside,’’ IG analyst Alastair McCaig said.