Housebuilders were among the biggest fallers in the FTSE 100 and 250 on Monday as investors fled the sector ahead of Tuesday’s full- year figures from Barratt Developments, the UK’s third-biggest housebuilder by market value.

Barratt shares fell 4.6 per cent to a two-year low of 749½p, while Persimmon lost 2.8 per cent to 906½p and Taylor Wimpey marked its first day as a FTSE 100 company with a fall of 5.8 per cent to 271p.

Elsewhere, mid-cap builders Redrow and Bellway fell 6 per cent to 394½p and 1.9 per cent to £10.07 respectively.

However, analysts said talk that Barratt would flag a sharp slowdown when it reported were likely to prove wide of the mark.

“That’s just not the feedback we are getting from the private builders,” said one analyst.

The analysts pointed out that the pace of selling had accelerated in the afternoon, suggesting that US hedge funds had been “shorting” the sector in expectation of a US-style housing slump in the UK.

The poor performance of the housebuilders did not prevent the FTSE 100 from closing higher. It gained 9.2 points, or 0.1 per cent, to 6,465.9, supported by mining stocks, which are increasingly being seen by investors as the best way to get exposure to the growth of emerging markets.

Antofagasta gained 6.6 per cent to a best of 843p, while BHP Billiton rose 5.7 per cent to a record high of £17.50 and Vedanta Resources climbed 4.7 per cent to a new high of £22.35.

Lower down the market, the FTSE 250 finished 53.9 points, or 0.5 per cent, lower at 11,040.8. Turnover was a below-average 2.7bn shares, and that total was inflated by a trade of 200m sharesin Vodafone, up 0.3 per cent to 173p.

Once again, Northern Rock was the biggest FTSE 100 faller. Shares in the stricken mortgage lender swung violently before
closing 11.5 per cent lower at 172p.

JPMorgan said the Northern Rock saga would most likely end with the bank being sold at a heavily discounted price.

Analyst Ashley Stuart said: “Given the share price performance, we see no reason for potential acquirers to pay any premium to the share price, and think their bargaining position is becoming stronger”.

Marks and Spencer climbed 4.4 per cent to 592p after Deutsche Bank told clients to start buying before news of improving autumn trading emerged and the retailer outlined plans for a large share buy-back.

“We believe that H2 will prove a positive surprise and that profits growth will re-accelerate,” said analyst Rod Whitehead. “M&S has strong defensive merits, and more importantly, the profit boost from the massive store modernisation programme is only just starting.”

In the same sector, Tesco firmed 1.1 per cent to 447¼p after Citigroup turned buyer ahead of next Tuesday’s half-year results.

“We believe the interims could be a positive trigger for the share price if, as we expect, the company gives a bullish outlook statement
for the UK,” said analyst James Anstead.

Smiths Group added 2.2 per cent to £10.50 amid reports that the engineering conglomerate would announce the departure of Keith Butler-Wheelhouse, chief executive, and a strategic review when it reports results tomorrow.

Traders believe Melrose, the FTSE 250 engineering company, could be interested in buying Smiths’ John Crane seals business, should it come up for sale as part of the review. Melrose rose 3.4 per cent to 190½p.

Among the mid-caps, Axon, the SAP software consultancy, fell 5.8 per cent to 875p after KBC Peel Hunt downgraded it to “hold” because of valuation.

But LogicaCMG, the IT services company, firmed 1 per cent to 156¾p on talk that it could be close to announcing the appointment of a new chief executive.

Abbot Group improved 2.2 per cent to 275p amid rumours the oil field services group had received an informal takeover approach.

Takeover talk also supported Halfords, the car parts and bicycle retailer.

Its shares added 0.3 per cent to 364p, with Autobacs Seven, a 5 per cent shareholder, again the name in the frame.

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