Friday Closing Market: Fears for real economy depress market

Fears that the credit crunch is starting to bite hard with mortgage buyers and the property industry left the London markets on depressed form on Friday.

The FTSE 100 index ended the day down 24.8 points at 5,692. Meanwhile the FTSE 250 index was also down 20.7 points, some 0.2% at 9,961.3. Both indices were led down by housebuilders.

The FTSE 100's worst faller was Persimmon which shed 40p to trade at 749.5p while in the FTSE 250 property company Mapeley was the worst performer, though this was largely due to the break up of buy-out talks. It lost 236p to stand at £13.21. Close on its heals was housebuilder Barratt Developments which shed 27.25p to trade at 410.75p.

The forces driving down housebuilders were partly attributable to negative data on UK house price growth but also the continuing trickle of announcements from mortgage lenders that they are increasing tracker rates to slow new lending.

The worst of the housing and real economy gloom was offset on the markets though by a ratings upgrade from Deutsche Bank for the miners. It meant that they dominated the risers board. However, some positive stock specific news also helped the performance of the blue-chip index.

Enterprise Inns soared to the top of the FTSE leaders board on the back of a positive trading statement and the news that it is putting refinancing plans on hold because of the credit crunch. The stock added 45.75p to trade at 554p, a rise of some 6.85%.

Another positive bit of stock news came for Punch Taverns and Mitchells & Butler which announced they were calling off merger plans. The market clearly though the proposals were value destructive because both stocks were swiftly market up following the news. Punch went to the top of the FTSE leaders 250 board for the day adding 35.5p to trade at 554p. Similarly, Mitchell & Butler added 13p to trade at 342.5p.

Outside of the main indices the FTSE AIM All Share index rose some 1.9 points to a value of 958.4 points. Meanwhile in New York the market was market was up with the Dow Jones Industrial Average adding 6.6 points to trade at 12,351.

There was little movement in currency markets with £1 buying $1.991 at close of business in London.