"Persimmon's AGM [on Thursday] has upped the ante. Announcements from the housebuilders have become even gloomier and we believe that they are now saying it as it is in terms of volumes," said Cazenove.
The broker added: "One question we are often asked is: 'Isn't that in the price?' We would answer: 'Much of it', but [as Thursday] proves, it never all is.
"We believe we may have to wait for later in the year, until the full story on prices emerges. News flow is toxic, but has not capitulated yet."
Persimmon was down 11p at 597.5p, Taylor Wimpey fell 7.25p to 130.25p and Bovis Homes shed 10p to 458p.
Elsewhere, bid rumours were evident around Carphone Warehouse, again. And yet again, Vodafone and Best Buy were cast as suitors, vying for the broadband and retail businesses respectively. Traders were unconvinced, citing the well-worn history of Friday rumours and pointing to a new note from Morgan Stanley as the cause of the strength in the stock, which rose by 8p to 257p.
The broker said the recent share price weakness, borne of "concerns about CPW's seeming inability to turn profits into cash", had been overdone. "We leave our forecasts unchanged ... and see no reason to change our 290p price target. However, this now implies 16 per cent upside, so we upgrade the share to [over-weight] from [equal-weight]."
Vodafone was also up, gaining 1.8p to 159.2p.
Overall, the FTSE 100 was up 40.7, or 0.7 per cent, to 6,091.4. The market was strong in the morning, shrugging off evidence of slowing UK GDP growth from the Office of National Statistics to register early gains. And it remained firm, drawing strength from financial and transport stocks in the face of additional gloomy economic news. This came in the form of a YouGov/Citigroup survey which revealed UK inflation is expected to hit 3.8 per cent in the year ahead, well beyond the Bank of England's 2 per cent target, and, over in the US, a Reuters/University of Michigan survey which showed consumer confidence fell for a third straight month in April.
The banks rallied as investors were reassured by overnight news from Merrill Lynch, which said it was maintaining its quarterly dividend. A report from Goldman Sachs, while expressing some caution on the sector, also helped sentiment. The broker said it did not expect HBOS and Barclays to the go the way of Royal Bank of Scotland and launch a rights issue, adding: "... We see both of them attempting to use organic capital generation to maintain and build capital ratios. The key swing factor, in our view, is if there were to be a permanent impairment to earnings."
HBOS was up 8p at 497p and Barclays gained 12p to 467.25p. Alliance & Leicester was the strongest among the banks, adding 21.5p to 514.5p, claiming second place on the FTSE 100 leader board.
A respite from the rising price of oil protected airlines from some mixed broker sentiment. "Ugly times, but not yet ugly enough," said ABN Amro, commenting on the state of the sector. It cut its target price to 200p from 260p for British Airways and to 300p from 670p for Easyjet. Citigroup, while also reducing its target price for BA, to 330p from 400p, and for Easyjet, to 440p from 490p, was more positive: the broker highlighted both as its top picks for longer-term investors.
At the close, BA was up 8.5p at 221.25p while Easyjet rose 8.75p to 296.75p.
On the FTSE 250, the energy services specialist Wood Group was weak, losing 3.25p to 453.5p, after UBS revised its rating on the stock to "neutral" from "buy". The broker said: "Wood Group has risen 35 per cent in the past three months, significantly outperforming its UK peers Amec and Petroface.
"As of April 28, [the company] will be promoted from the FTSE 250 to the FTSE 100, joining Amec on the main list. We do not expect significant outperformance following this event: FTSE index changes are well flagged to the market."
Autonomy was strong after Panmure Gordon, encouraged by its meeting with management in the wake of the recent results, moved the stock to a "buy" from a "hold" rating, saying that it saw "scope for earnings upgrades". The shares climbed 28p to 872p.
On AIM, Scotty Group was up 21.21 per cent or 0.35p to 2p as market talk suggested that the company was due to announce a major contract win.
Petrolatina Energy was also up, gaining 23.08 per cent or 1.5p to 8p, after the company announced a non-binding agreement with Tribecapital Partners, a Colombian private equity firm. Under the terms of the agreement, Tribecapital has agreed to invest $25m (£12.6m) in Petrolatina at a premium to the company's current share price.
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