Builders hit by Help to Buy review
Housebuilders have taken a hit on the stock market after it was announced that a flagship home ownership scheme that has helped pump up the sector will be reviewed sooner than expected amid fears it could create a property bubble.
Persimmon led the fallers' board on the FTSE 100 Index while second tier stocks such as Taylor Wimpey, Barratt, Bellway and Bovis - as well as estate agency Countrywide - also suffered following the announcement on Help to Buy.
The mood on the wider market was not much better, with London's top-flight down 52.9 points to 6512.7 after comments from Bank of England governor Mark Carney about the £375 billion quantitative easing (QE) programme.
QE has helped sustain share prices but Mr Carney told the Yorkshire Post that while extending it remained an option, he felt there was no current need for more bond buying, given that the UK recovery had "strengthened and broadened".
The message dampened the appetite for equities but had a positive effect on the pound, which rose one cent to 1.61 US dollars, though sterling was flat against the single currency at 1.19 euros.
European markets were flat as a general malaise took hold over the looming threat of a US government shutdown amid wrangling on Capitol Hill, while on Wall Street the Dow Jones Industrial Average was down in early trading.
Meanwhile in London it was property shares that stood out as the losers from the Treasury's announcement that the Bank of England would review Help to Buy every year when it had previously been due for a check-up only after three years.
The scheme offering loans and mortgage guarantees to help householders on the property ladder has buoyed profits at builders and other firms closely linked to the property market.
But investors were spooked by the announcement that Government support for housing could be tightened sooner than was believed.
Annual reviews by the Bank's Financial Policy Committee could see a £600,000 price cap brought down and fees paid by lenders increased if it is thought Help to Buy is overheating the market.
Persimmon fell more than 4%, or 48p, to 1061p on the FTSE 100 while on the FTSE 250, Countrywide dipped nearly 5%, or 26.5p, to 518p with Taylor Wimpey down 3.9p to 97p, and Barratt dropping 9.6p to 302.1p.
Bellway was down 40p to 1262p and Bovis off 20p at 712p.
Meanwhile, shares in energy firm SSE climbed 8p to 1468p as investors saw value in the stocks that fell heavily earlier in the week on Labour's announcement that it would impose a tariff freeze if elected.
British Gas owner Centrica was also a big climber early in the session but dropped back to finish just 0.1p up at 367p.
Traders also focused on the listing of Royal Mail, due to join the stock exchange on October 15, as individuals were told they could start applying for shares - which will cost between 260p and 330p, valuing it at between £2.6 billion and £3.3 billion.
The biggest risers on the FTSE 100 were Sports Direct, up 12.5p to 713p, Aggreko up 18p to 1608p, IMI climbing 16p to 1469p and BT up 3.3p to 346.4p.
The biggest fallers on the FTSE 100 were Persimmon, down 48p to 1061p, Antofagasta down 23.5p to 830p, Vedanta Resources off 30p at 1073p and Rio Tinto down 73.5p to 3067p.