Market Report: Housebuilders tumble as analyst fears double dip

The housebuilding sector was blown down yesterday after one analyst huffed and puffed with talk of a "serious risk of a double dip in house prices".

Worst hit was Taylor Wimpey, after Alistair Stewart of Investec released a note dubbed "Double Trouble". He downgraded all of his "buy" ratings and slashed price targets citing evidence over recent weeks "that the housing market has ground to a standstill". Taylor Wimpey closed 0.9p down at 23.13p.

The immediate catalyst for the ratings cull was Bellway's results, he said, which pointed to a deterioration in the housing market, as well as the Government's programme of cuts which is set to hit the sector. It cut several stocks down to a "sell" including Persimmon, which closed 2p weaker at 356.6p.

It was a sluggish session as the week drew to a close, with the FTSE 100 down 16.4 points to 5,741.3. There was excitement around the highly anticipated float of Betfair. The group, with those annoying adverts where the "middleman" is inexplicably drinking milk in a pub, priced its float at 1,300p. The shares were flying on their first day with conditional trading finishing at 1,550p. The rise lifted the company's value to over £1.6bn, making it a contender for the FTSE 250.

The banks returned to favour after a note from Bank of America Merrill Lynch. The analysts said: "We are only part-way through a structural bull market for bank share prices that will pave the way for significant upside in the stocks." They added that several banking stocks, including Lloyds Banking Group, could double from here. Lloyds was the strongest sector performer, up 1.4p to 71.85p.

Tui Travel was flying high once more following the hammering it took the previous day. This came after it revealed the details of an accounting cock-up that left it £117m out of pocket. The shares rebounded 6.5 to 211.5p topping the blue chips, even as Citi cut its recommendation to "hold".

On the downside, a cock-up caused another drop, this time at Legal & General. The group was forced to bring forward its sales figures early after some bright spark released them to analysts by mistake. The shares closed down 0.6p to 103.7.

Reckitt Benckiser tumbled after chief financial officer Colin Day left. This was compounded by the evaporation of the previous day's benevolence and the stock closed 164p lower at 3,386p.

The second line was topped by MicroFocus after takeover speculation emerged in the morning. The technology stock rose 29p to 411.5p on talk that it could be a target for US giant IBM. Panmure Gordon said the group "has some interesting skills that will very much of interest to IBM" on talk that of a potential £1bn cash bid.

The previous day's woes at Provident Financial – a firm that traces its roots back to 1880s – were long-forgotten as the stock stormed back up. The subprime lender's interim management statement was hailed by investors as the company said it expected a "good result" for the year. It also played down the impact of the government's spending cuts. Shore Capital upgraded the stock to "buy" from "hold" and it closed up 35pto 808p.

The euphoria in the rail companies was shunted into the sidings two days after George Osborne gave them the green light to hike their fares. Cue groans up and down the country. Stagecoach Group jumped the tracks, slumping 4.4 per cent, or 9.5p, to 206.4p.

A broker note from Citi did for the travel companies. On the mid tier, Thomas Cook Group fell 3.4p to 180.5p as the broker cut its rating from "buy" to "hold". The same broker reduced JD Wetherspoon's price target slightly to 530p, but it was a note from HSBC that really gave the pub company a sore head, lowering its recommendation from "neutral" to "underweight". It closed down 1.6p at 412p.

Investors in PartyGaming were out of luck, as the group put out its third quarter management statement, sending the shares down 0.3p to 271.2p. The market was disappointed by its underperformance in poker, which fell 5 per cent. The group, which operates brands including PartyPoker and PartyCasino, said tougher online competition was squeezing margins.

The ray of hope for the division, chief executive Jim Ryan said, came from the momentum in European regulation moving in its direction. He added the deal with bwin to create the world's biggest listed internet gambling group would close by April.

On the wider market, illustrated book publisher Quarto Group was booming off the back of an update. It posted a rise in profits from £3.1m to £3.6m after it saw "explosive" growth in Brazil. The shares rose 7p to 130p in the company that publishes everything from The World of Fine Wine to 1001 video games you must play before you die, and Michael Winner's Unbelievable. My life in restaurants and other places.

Another publisher was in focus on the Alternative Investment Market but not for the right reasons. Dods Group, which publishes The House Magazine, saw its shares pulped as it warned on profits over the cuts in training budgets for the civil service.

As a result, the shares closed down 3.25p to 6.75p.

FTSE 100 Risers

Marks & Spencer 417p (up 7.9p, 1.89 per cent)

Stalwart of the UK high street sees shares rise after Bernstein lifts price target.

Royal Bank of Scotland 46.18p (up 0.62p, 1.36 per cent)

Bank of America Merrill Lynch reckons the stock could double from here.

British Airways 283.1p (up 2.7p, 0.96 per cent)

Flagship carrier takes off as Goldman Sachs rises to 377p from 295p with a "buy" rating.

FTSE 100 Fallers

Vedanta Resources 2157p (down 42p, 1.9 per cent)

Mining company suffers after Bank of America Merrill Lynch cuts rating to "neutral".

SABMiller 2055p (down 22p, 1.06 per cent)

Shares slide on the day group's head of Latin America announces retirement.

BT Group 154.5p (down 1.6p, 1.02 per cent)

Shine comes off the telecoms company the day after pension trustee victory over the Government.

FTSE 250 Risers

Punch Taverns 76p (up 1.85p, 2.49 per cent)

Shrugs off Citi cut to target price amid talk in the market of a potential bidder.

TalkTalk Telecom Group 131.5p (up 3.2p, 2.49 per cent)

Company enjoys market support after Jefferies raises stock to "hold" from "underperform".

Inchcape 349.3p (up 4.1p, 1.19 per cent)

A price target rise from UBS – upping its recommendation to 390p – lifts the stock.

FTSE 250 Fallers

Barratt Developments 80.2p (down 3.3p, 3.95 per cent)

Investec's bearish take on the housebuilders smashes the sector including Barratt.

Debenhams 75p (down 1.5p, 1.96 per cent)

Investors decide to take profits following share gains off the back of Thursday's results.

Thomas Cook Group 180.5p (down 3.4p, 1.85 per cent)

Travel stock falls after Citi pulls support, cutting recommendation to "hold"

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