* FTSE 100 up 0.4 pct, snaps longest losing streak since
* Construction groups lead risers as UK govt says to extend
* Ukraine crisis keeps investors wary
By Francesco Canepa
LONDON, March 17 (Reuters) – Britain’s top share index
snapped its longest losing streak in 2-1/2 years on Monday, led
higher by construction companies after the UK government said it
plans to continue supporting home-building.
But tensions over Ukraine kept investors wary. Western
powers threatened sanctions against Russia after Crimea’s
Moscow-backed leaders declared a 96-percent referendum vote in
favour of quitting Ukraine.
Housebuilder Persimmon led gainers on the FTSE 100,
gaining 6.5 percent after British chancellor George Osborne said
on Sunday he plans to extend a scheme to encourage house
building and develop a new town close to London.
Markets had speculated the scheme was going to be gradually
Other housebuilders also rose, with Barratt Developments (LSE: BDEV.L – news)
, Taylor Wimpey (LSE: TW.L – news) and Berkeley Group up
between 3 percent and 6 percent. Britain’s No.1 supplier of
building materials, Travis Perkins (LSE: TPK.L – news) , rose 1.4 percent.
“It is mainly being used outside London by first-time
buyers, so I think it’s going to be positive for names like
Taylor Wimpey, Persimmon (Frankfurt: OHP.F – news) and Barratt,” Ian Osburn, an analyst at
Cantor Fitzgerald, said.
“But, also, inside London the international buyer, (who) is
pushing along the transactions and prices, now has confidence in
government support, so I think it’s going to be positive for
Osburn estimated that the scheme, if it continued in its
current form, could boost the earnings of these companies by
between 10 percent and 15 percent every year.
The FTSE 100 was up 0.4 percent at 6,556.04 points,
bouncing from a one-month low hit on Friday and recouping a
fraction of the 2.8 percent it shed last week.
The UK blue-chip index had fallen for six straight sessions,
its longest losing streak since November 2011, leaving it
“oversold” on its seven-day Relative Strength Index, a technical
Traders also said investors were somewhat relieved to see
that the Crimean referendum had passed without major incidents.
“First (Other OTC: FSTC – news) of all the referendum basically turned out as
expected no surprise there,” Markus Huber, a senior trader at
Peregrine & Black, said.
“Positive was also that the referendum in general went very
orderly… although much seems to depend on the sanctions the
West will impose on Russia.”
In a sign of relief, the cost of insuring against future
swings on the FTSE, as measured by the FTSE 100 volatility index
, fell around 5 percent.
David White, a trader at SpreadEX, said he expected
volatility to spike again at the first sign of military action
or when sanctions against Russia are announced.