FTSE lacks the property of mercy

NEWS of a record 3.6 per cent fall in property prices last month sent shockwaves through the lending and housebuilding sectors yesterday, dragging down the broader Footsie.

The shock Halifax data dealt a blow to stocks including mortgage lender Lloyds Banking Group and house builder Persimmon, sending the FTSE 100 index into the red - down 19.26 points at 5,662.13.

The fall came despite the index hitting an intra-day high of 5,707.33, breaking through the psychological 5,700 barrier.

On the other side of the Atlantic, a fall in unemployment claims failed to cheer investors, with the Dow Jones Industrial Average slipping into negative territory in early trading.

The US labour department said claims dropped by 11,000 to a seasonally adjusted 445,000 - the lowest level since the week ending 10 July.

In London, the focus remained on the September house price figures, while the Bank of England also voted to keep interest rates at 0.5 per cent and its quantitative easing (QE) programme at 200 billion.

The market showed little reaction to the bank's decision, but it gave a boost to sterling - hitting $1.60 at one stage for the first time since February. Currency traders had been nervous that the Bank might boost QE support, which would have hit the pound hard.

But the Halifax figures rattled the banking sector as shares in consumer-focused lenders Royal Bank of Scotland and Lloyds dropped 1.7p to 47.8p and 2.5p to 73.9p respectively. In the second tier, housebuilder Barratt Developments dropped 4.5p to 94.8p, Persimmon slipped 16.4p to 376.5p and Taylor Wimpey fell 0.9p to 27.8p.

Retail stocks weathered the latest economic storm after Marks & Spencer posted a 5.1 per cent rise in like-for-like sales in the second quarter of its financial year.

The retail chain beat City expectations with general merchandise sales up 7 per cent and food sales ahead 3.7 per cent. After a weak start, M&S shares closed up 19.2p at 410p.

There was no such rally for car parts-to-cycling retailer Halfords after it reported a 6.3 per cent drop in like-for-like sales in the second quarter.

It highlighted a disappointing trading performance in the bicycle department and said it would launch more promotions in order to address the downturn. Shares were down 39p to 408p after analysts scaled back profit forecasts.

Elsewhere in the FTSE 250 Index, financial advisor Hargreaves Lansdown shed 18.9p to 452p after co-founder Stephen Lansdown sold 58 million worth of shares in the company, taking his stake down to about 20 per cent.

Rank Group moved 3.5p higher at 125p after the company's third-quarter trading update prompted Investec Securities to raise its price target for the Mecca bingo and Grosvenor casino owner. With like-for-like sales up 7 per cent, Investec said Rank had outperformed its expectations amid further signs of operational progress.

On Aim, Edinburgh-based digital CCTV supplier Indigovision continued its strong recent form following last week's full-year results. Shares closed up 15p or 3.2 per cent at 490p.