Shares in the housebuilding sector fell heavily after a downbeat note from broker Jefferies, which said the property market is coming under pressure from weak prices, falling mortgage approvals and uncertainty over May’s general election.
Analysts said: “As a result, we are no longer recommending that investors buy any of the UK residential-linked shares under our coverage.”
Builders suffered the biggest falls among blue-chip stocks following the gloomy update, with Taylor Wimpey leading the decline, tumbling 7.1p, or 5.4 per cent, to 125.7p.
Rival Persimmon was not far behind, sliding 80p or 5.2 per cent to 1,459p, while Barratt dropped 23.3p to 431.4p.
Those falls saw the FTSE 100 Index end the day down 68.82 points at 6,501.14 as traders pointed to a renewed slide in oil prices and a muted reception for US jobs data.
Tony Cross, market analyst at Trustnet Direct, said: “Looking into next week, the attention will once again be across the Atlantic as the US fourth-quarter earnings season kicks off. Shortfalls here could serve to further dent confidence in stocks on a global basis.”
Meanwhile, Tesco fell 5.15p, or 2.5 per cent, to 204.1p after a credit downgrade from ratings agency Moody’s. That followed a stellar session yesterday, when the stock had climbed 15 per cent as investors cheered signs that a slide in sales was easing off, as well as plans by new chief executive Dave Lewis to shut unprofitable stores.
Fellow “big four” grocer Sainsbury’s dropped 10.6p, or 4.2 per cent, to 241.8p, while Morrisons, which updates investors next week on how it fared over the festive season, was another heavy faller, losing 8.4p, or 4.6 per cent, to end at 176.3p.
The biggest top-flight risers were broadcaster ITV, up 4p at 213.5p, and pensions firm Friends Life, which rose 6.6p to finish the day at 371.7p.