Market Report: Scathing HSBC note prompts property sell-off

HSBC's damning note on real estate investment trusts triggered a sell-off in some of the biggest names in the business yesterday.

Noting that the "sector bounce in the year to date has exacerbated significant downside opportunities," the bank revised its stance on a number of prominent stocks.

As a result, British Land, on which HSBC reduced its rating to "underweight" from "neutral", and slashed its price target to 945p from 1160p, closed down 4.76 per cent or 47.50p at 951p.

The bank also downgraded Hammerson, reducing the stock's target price to 765p from 1230p and depressing it by 6.81 per cent or 78p to 1067p by close, and Liberty International, reducing the stock's target price to 750p from 960p and depressing it by 6.4 per cent or 69p to 1,009p by the end of the day.

Sector counterparts Segro, which had its price target reduced to 450p from 580p, and closed down 4.57 per cent or 24p at 501p, and Land Securities, which had its price target cut to 1,565p from 1,850p, and closed down 4.15 per cent or 67p at 1,547p, were hit too.

Overall, the FTSE 100 index was depressed as concern for the US economy was compounded by fresh figures from America's Institute of Supply Management.

The ISM's non-manufacturing index, a gauge covering almost 90 per cent of the US economy, fell to 41.9 for January, the lowest since October 2001 and well below expectations of 53 points.

The number, characterised by one market watcher as "another recession marker on the radar screen", took the FTSE 100 index 158.20 points lower to 5,868.

Economic concerns also weighed heavily on house-builders, and the sector, after registering some gains earlier in the week, reversed its course yesterday.

Taylor Wimpey led the casualties, losing 8.12 per cent or 16.35p to close at 184.90p. Persimmon was hit as well, losing 7.34 per cent or 58p to close at 732p, as was Barratt Developments, which lost 5.13 per cent or 22.25p to close at 411.25p.

Others in the sector, including Bovis Homes, which lost 4.14 per cent or 25.50p to close at 590p, Bellway, which lost 6.40 per cent or 53p to close at 775p, and Redrow, which lost 6.43 per cent or 19.25p to close at 280.25, were also hit yesterday.

Royal Bank of Scotland was the subject of some vicious rumours suggesting that it may have to go cap in hand, Northern Rock-style, to the Bank of England. While some analysts poured scorn on the speculation, dismissing it as baseless scaremongering, the stock was hurt by fleeing investors. The company's shares closed down 5.55 per cent or 22.50p at 383p.

Helpful rumours, on the other hand, failed to lift Fiberweb. Renewed bid speculation surrounded the non-woven fabric maker. Last afternoon murmurs suggested an approach by Kimberley Clark or Dupont. The talk failed to rescue the stock, which closed down 2.62 per cent or 1.50p at 55.75p.

Like the FTSE 100, the FTSE 250 index closed down as economic fears mounted steadily during the day. By the close, the index slumped to 9955.3, down almost 3 per cent or 306.8 points.

UK Coal fared better on the back of continued demand for coal, which one trader cast as "the new gold". The company's shares were up 3.28 per cent or 14.75p to 464.75p by the end of the day.

On the downside, Bodycote, which was also the subject of suggestive whispers last week, fell as investors indulged in some profit-taking. By close, the company's shares were 1.09 per cent or 2p lighter at 181.75p.

Central African Mining also fell, by 2.72 per cent or 1.25p to 44.75p, but some talk of a bid approach began to fade by close.

On AIM, Roxi Petroleum took a hit as the market grew suspicious about margins at the Kazakhstan-focused oil and gas developer. A statement from the company, that there was nothing to report, failed to quell the disquiet as investors began to exit the stock, which closed down 27.4 per cent or 10p at 26.50p.

CeNes Pharmaceuticals was one of the highlights of the day. While CeNes did confirm that it was in talks regarding a potential offer for the company, the identity of the suitor remained unknown.

Market speculation pointed to a partner for lead product, the M6G painkiller, or Alan Goodman and his Avlar Bioventures group, and sent the company's shares up by a spectacular 64.06 per cent or 20.50p to 52.50p by close.

Also on AIM, Kentz Corporation, the holding company of the Kentz engineering group, made its debut on the LSE.

The placing, at 115p a share, raised £66.7m before expenses. Kentz's shares closed at 124p.