Market Report: Persimmon slumps amid sector nervousness

Shares in housebuilders dived yesterday on fears of fresh skeletons in upcoming trading statements. The performance of some of the biggest stocks in the business left no doubt about the extent of market nervousness regarding the prospect of more bad news from an already depressed sector.

Advice from Dresdner Kleinwort, to "abandon the sector ahead of this week's flurry of bad headlines", did not help investor sentiment as Persimmon, which will be the first to update the market tomorrow, slumped by 5.52 per cent, or 40p, to close at 685p. In the FTSE 250, Bovis, which is due to issues its update this Friday, fell by 5.76 per cent, or 33p, to close at 540p while Bellway lost almost 5 per cent, or 38p, to close at 734.5p.

Retail stocks also suffered, finding themselves stirred, shaken and pushed to the bottom of the table, as the market anticipated a visit from the ghost of the Christmas just past on the occasion of Marks & Spencer's trading statement, which is due tomorrow.

After being anointed Goldman Sach's "Christmas winner", M&S's prospects came into question in the weekend press. Predictions for like-for-like sales growth, which had hovered around +3 per cent, were reported to have been revised down to as low as -2 per cent. And while some were more charitable and pegged the numbers to come in flat, the speculation shaved almost 4 per cent off the stock as it ended the day down 19.5p at 498.5p.

M&S's sector counterpart Next lost 68p or 4.64 per cent, closing at 1,396p, while the B&Q owner Kingfisher lost 6.5p, or 5 per cent, closing at 123.5p. The three were part of the retail contingent in the table of the biggest losers on the FTSE 100. The blue-chip index shed 0.2 per cent, closing 12.8 lower at 6,335.7.

DSG International, which topped the list of fallers on the FTSE 250, closed down 6.25p, or 8.12 per cent, at 70.75p. Debenhams was just a few steps behind, coming eighth in the list, down almost 6 per cent, or 4.5p, at 71.25p.

The supermarket giant Sainsbury's, another venerable high-street name, saw its shares pulled down by news that it may have missed its internal sales and profits targets in the run-up to the crucial Christmas trading period. The company's share price dived 3.58 per cent, or 14.5p, to close at 391p.

Of the risers, British Energy swung to the top of the FTSE 100 leader board as analysts at Cazenove upgraded their estimates for the stock. The broker is reported to have changed its fair-value estimate for the shares to 730p from 660p on the back of higher long-term electricity prices, sending the share price up by 32.5p, or more than 6 per cent, to 571p.

Defensive stocks from the drug sector joined British Energy. GlaxoSmithKline rose by 3.53 per cent, or 45p, to close at 1,321p, the second highest riser on the 100 index yesterday, while AstraZeneca climbed 60p, or 2.84 per cent, to 2,170p, making it the fourth-best performing stock on the FTSE 100.

Scottish and Southern was another winner. The company's share price rose by more than 2 per cent, or 33p, to close at 1,668p as Credit Suisse said that its acquisition of the wind developer Airtricity made "solid strategic sense". While noting that the deal would bring more business and credit risk, the broker said that it would provide the company with new growth opportunities in international markets such as China.

Of the small caps, GCap Media saw its shares climb as the company confirmed that it had rejected a 300m-plus takeover bid from Global Radio. The rebuff propelled the commercial radio operator to the top end of the table of risers, with its shares jumping 45.45 per cent, or 55p, to close at 176p.

Huddersfield-based Marshalls saw its shares rise on the back of an upbeat trading statement. The company said that the public sector and commercial market, both important sales generators, had improved, sending its share price up by 17.5p or 6.4 per cent, to 254.25p.

And finally, after delaying its debut last month, Lifeline Scientific started trading on AIM. The specialist medical technology company raised 5.4m at a price of 150p per share. The company is focused on the Lifeport Kidney Transporter, a device which, Lifeline claims, improves the utilisation of donated kidneys and increases the organ recovery rate. By the day's close, the company shares had edged up slightly to close at 151.5p.