MARKET REPORT : Builders under pressure as housing prices stay weak

Building shares are in danger of experiencing an old fashioned demolition job. They came under further pressure as yet more demoralising evidence appeared about the continuing weakness of the housing market.

Wickes, the builders merchant and do-it-yourself group, started the latest decline when it disclosed that its Builders Mate offshoot had failed to meet targets. Profit downgradings soon materialised, with SG Warburg cutting by pounds 5m to pounds 37m. The shares fell 13p to 100p.

But Wickes was not the only group hit by profit revisions. Redland, the building materials group, fell 14p to 433p as UBS reduced its estimates and RMC suffered from NatWest Securities' attention.

UBS cut Redland by pounds 30m to pounds 380m and pounds 50m to pounds 400m; NatWest lowered RMC, down 17p at 1,120p, a more modest pounds 4m to pounds 328.5m.

Just to pile on the agony, ABN Amro Hoare Govett said to sell Caradon, 5p off at 247p, and Wolseley, off 4p at 337p; Kleinwort Benson turned bearish on Marley, easier at 117p, after visiting the company.

The rest of the stock market once again failed to deliver. A splendid morning session aroused hopes that the FT-SE 100 index would cross the elusive 3,400 points. But again shares flattered to deceive and at the close, with New York offering little support, a 15-point gain had been reduced to a mere 1.1 with the index at 3,378.3.

But VSEL was good for sentiment. The prospect that the pounds 835m being handed out by successful bidder GEC would be pumped back into the market by VSEL shareholders clearly helped sentiment. And British Aerospace's realistic decision not to attempt to top the GEC shot with a dilutive share exchange offer produced widespread relief, lifting BAe 28p to 560p.

Vosper Thorneycroft, the shipbuilder, could be the next BAe target. Its shares rose 9p to 853p. GEC, which is still thought to hanker after BAe, celebrated success with a modest gain to 326p and VSEL was lowered 29p to 2,134p.

GKN, up 12p at 635p, drew strength from lingering hopes of a pounds 2bn Apache helicopter order from the Ministry of Defence and the prospect of some VSEL cash finding its way into the shares.

Fisons, the drugs group, continued to edge ahead, up 2p at 197p, as the market continued to sweat about the expected Medeva, 2.5p down at 255p, bid.

Banks were inspired by Citicorp's decision to indulge in a pounds 1.9bn share buy-back. There has been a growing suspicion that UK clearing banks, particularly Barclays, are contemplating share buy-backs. Barclays gained 6p to 686p.

Kleinwort Benson was firm at 705p. Although most observers take the view that Dresdner Bank should have the bid field to itself, there is a sneaking suspicion in some quarters that Credit Suisse, the Swiss group that has yet to make a big impact in London, might be tempted to intervene.

Shell tumbled 9p to 750p on the Brent Spar humiliation, and the prospect of oil rig decommissioning costs also hit British Petroleum, off 10p at 450.5p. Laporte, the chemical group, put on 16p to 745p as a lingering line of stock was at last cleared.

Allied Domecq, the drinks group, failed to hold early gains, closing a shade lower at 548.5p. The sale of its Tetley tea business is expected soon.

Stoves, the kitchen equipment group once part of Williams Holdings, reached 181p from a 163p placing price.

Pearson, the banking and media group, rose 13p to 633p. A recent analysts' visit to the group's Spanish operations was thought to be responsible for the interest.

Securicor, the security and mobile telephone group, was busily traded with the non voting "A" shares attracting a series of chunky deals. UBS was said to be responsible. The price held at 998p. Vodafone, still attracting US support, rose 6p to 240p.

General Accident was weak, off 18p at 592p, with Hoare Govett making negative noises; Abbey National was helped 5p higher to 490p by Credit Lyonnais Laing support.

Tadpole Technology, hard hit by disappointing trading, managed a 5p gain to 43p and Drew Scientific, another which has been under pressure, rose 3p to 29p.

Hampden, the Ulster do-it-yourself group, rose 3p to 63p, reflecting J Sainsbury's pounds 100m development of seven superstores in the province.

Sainsbury, following its takeover of the Texas do-it-yourself chain from Ladbroke, sits on nearly 30 per cent of Hampden, which runs Texas and Kwit Fit outlets. For a long while, Hampden was seen as a Ladbroke target. With Sainsbury expanding in Ulster, there is a growing belief that the supermarket giant will eventually swallow Hampden, which is expected to produce profits of pounds 1.5m this year, against pounds 876,000.

Hampden shares were 21p a year ago.