Housing-related stocks take a pounding amid correction fears

Market panic over the emergency funding for Northern Rock claimed more victims as approximately £5.9bn was wiped off the share value of the UK house building, estate agency and banking sectors, not including the £846m decline in the value of Northern Rock itself.

The losses stemming from Northern Rock's woes were magnified by a leaked report from online estate agent Rightmove that showed a 2.6 per cent fall in house sale valuations between August and September.

The report is not due to be made public until Monday, but the leak encouraged sellers already spooked by Northern Rock. Rightmove shares closed the session down 5.8 per cent after a 34p fall to 550p, while Savills, the upmarket estate agency, was also in the red after posting a 16.75p loss to close at 408.75p.

Eamonn Flanagan, an analyst at broker Shore Capital, said that the crisis at Northern Rock is bound to have knock-on effects: "If lenders become unable to lend, then the domino effect will flow through into related sectors."

An already jittery house building sector was the hardest hit, with all UK house builders down more than 7 per cent. Bellway was the biggest faller as its shares crashed by more than 7.5 per cent to end the session 87p worse at 1067p. Taylor Wimpey and FTSE 100 members Barratt Developments and Persimmon were also sold heavily, and even solid interim numbers from Bovis Homes earlier in the week could not prevent selling pressure.

Not surprisingly, the biggest losers in the banking sector were mortgage banks. HBOS, the UK's largest mortgage lender, closed 32p worse at 860p while rivals Bradford & Bingley shed 27.5p to close at 329.75p. Alliance & Leicester, viewed by many analysts as the safest UK mortgage banking stock with no exposure to the sub-prime market, did not escape the bloodbath as it tanked to close 64.5p worse at 873p.