Housebuilders dent London's FTSE 100 even as banks gain

Big banks such as HSBC, Barclays and Standard Chartered rose about 1% each, building on last week's gains. Berkeley Group, Barratt Developments, Persimmon and Taylor Wimpey were down between 3.0% and 2.8% after Britain ordered housebuilders to pay around $5.4 billion to help remove dangerous cladding from buildings following a deadly 2017 London fire.

UK's blue-chip index slipped in morning trade on Monday as housebuilders were hit by $5.4 billion in costs to remove cladding from buildings, while banking shares extended gains on expectations of interest rate hikes.

The FTSE 100 was down 0.1% following weekly gains spurred by a rotation into sectors such as banks, oil & gas and mining as investors priced in faster interest rate hikes by major central banks. Big banks such as HSBC, Barclays and Standard Chartered rose about 1% each, building on last week's gains.

Berkeley Group, Barratt Developments, Persimmon and Taylor Wimpey were down between 3.0% and 2.8% after Britain ordered housebuilders to pay around $5.4 billion to help remove dangerous cladding from buildings following a deadly 2017 London fire. Housing minister Michael Gove set an early-March deadline for the industry to agree to a fully funded plan of action, including a dedicated fund to deal with unsafe cladding.

"Given the tone of the letter from Her Majesty's Treasury (against further taxation) it appears their preference is to push the developers to agree to quick remedy for recladding against the backdrop of a threat of legal action," Jefferies analysts said. Persimmon had the least risk due to its low exposure, while Barratt, Bellway, Berkeley & Taylor Wimpey all had the higher risk of a more meaningful step up in provisions, Jefferies said.

Housebuilders Redrow, Countryside Properties , Bellway and Vistry Group dropped between 2.8% and 3.7%, while the FTSE 250 index slipped 0.2%. Overall, the midcap index slipped 0.2%, adding to weekly losses as a surge in COVID-19 cases due to the Omicron variant hit sentiment.

Plus500 rose 3.1% after the online trading platform said it expects annual results to exceed market expectations, even as it reported slower fourth-quarter growth. Biotech firm Avacta Group slumped 22.8% after it said it was halting sales of its COVID-19 antigen lateral flow test, AffiDX, to replace antibodies in the device and boost its ability to detect the Omicron variant at lower viral loads.

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