Homebuilders decline in British share trading
FTSE 100 index up 0.2%; Bodycote shares surge after update
Homebuilders lost ground in British share trading on Friday, after Bovis Homes painted a lackluster picture of the housing market in the first six months of the year.
Shares of Bovis Homes /quotes/comstock/23s!e:bvs (UK:BVS 339.40, -9.40, -2.70%) declined 1.3% outside the top index after it said that the new homes market remains subdued with ongoing liquidity issues in the first time buyer market "limiting the number of transactions and moderating sales price improvements."
Overall, average selling prices at the firm fell to 158,500 pounds in the six months to June 30, down from 159,700 pounds at the same point a year ago, with a greater proportion of social housing in the mix.
Still, the firm said that it intends to resume paying dividends at the end of the year as it also reported a 6% rise in legal home completions to 803 in the six months to June 30. Bovis said sales are in line with its targeted weekly rate and expects to reach its 2010 volume target.
Rivals trading lower on Friday included Persimmon /quotes/comstock/23s!a:psn (UK:PSN 380.80, -7.20, -1.86%) , down 1.2%, and Barratt Developments /quotes/comstock/23s!a:bdev (UK:BDEV 99.60, -2.50, -2.45%) , down 1.5%.
"[We] see weakness in the second half due to what we believe to be a hiatus in the market," said Investec analysts. "In the short term, we remain cautious on the sector due to feedback we are getting from the non-quoted market that seems at odds with quoted companies' regulatory news service statements," they added.
Bovis' comments follow survey data that also indicate a softer market, with mortgage lender Halifax stating Thursday that the average British house price fell 0.6% in June to 166,203 pounds and Nationwide stating at the end of June that British house prices rose just 0.1% in the month.
Both mortgage lenders attributed an increase in housing supply as responsible, at least in part, for the drop. The increase in supply may be due in part to the new government's decision to scrap a requirement that sellers provide detailed informational materials, known as Home Information Packs, to prospective buyers, noted Nationwide.
In addition, the U.K. government recently announced an emergency budget, raising worries about consumer spending going forward.
The top share index gained 0.2% to 5,114.65 extending a run of gains into four sessions. Week-to-date gains now stand at 5.7% for the FTSE 100 index /quotes/comstock/23i!i:ukx (UK:UKX 5,103, -2.17, -0.04%) .
Other European shares were also higher while U.S. stock futures were pointing to a mixed start on Wall Street following gains in the previous session.
Miners were advancing in London, with Antofagasta
(UK:ANTO 877.00, +25.50, +2.10%) shares up 3.1% after the firm was upgraded to buy from hold at Citigroup. The broker said the valuation was "both too low and attractive, given the company's commodity exposure and financial strength."
Goldman Sachs said that Antofagasta and Anglo American /quotes/comstock/23s!e:aal (UK:AAL 2,439, +26.50, +1.10%) , up 1.2%, are its top mining picks, arguing they are offering a combination of strong expected cash returns and volume growth over the next few years.
At the same time, the broker downgraded gold miners Randgold Resources /quotes/comstock/23s!e:rrs (UK:RRS 6,190, -55.00, -0.88%) /quotes/comstock/15*!gold/quotes/nls/gold (GOLD 94.17, -1.30, -1.36%) , down 0.8%, and Anglogold Ashanti (ZA:ANG 30,670, -325.00, -1.05%) /quotes/comstock/23u!e:agd (UK:AGD 2,874, -23.40, -0.81%) to sell from neutral, saying both companies seem to be pricing in most of the benefit from both rising gold prices and successful project execution.
Hochschild Mining /quotes/comstock/23s!e:hoc (UK:HOC 308.10, -10.00, -3.14%) , down 3.6%, was cut to neutral from buy on valuation.
Shares of engineering group Bodycote /quotes/comstock/23s!e:boy (UK:BOY 209.10, +18.40, +9.65%) jumped 10.3% outside the top index after the U.K. engineering group said it expects operating profit for the year to be significantly above the top end of market expectations.
The group, which specializes in heat treating services for the aerospace, defense and auto industries, said demand has improved steadily across the board since its last trading update in April, leading to a roughly 8% rise in first-half revenue from the 227.9 million pounds ($345.3 million) reported a year earlier. See full story.
Sarah Turner is a markets reporter for MarketWatch in London.
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