Britain's top shares index fell on Monday to underperform gains elsewhere in Europe, as a drop in housebuilding stocks took the shine off a rise in banking and mining stocks. The bluechip FTSE 100 index closed 0.1 percent lower at 6,200.12 points, which compared with a rise of 0.6 percent on Germany's DAX and 0.2 percent on France's CAC.
Banks such as Barclays rose on the back of similar gains at their European peers, after Italian bank stocks surged on expectations that the Rome government would soon thrash out a plan to set up a state-backed fund to buy bad loans and plug capital shortfalls. Mining stocks such as Anglo American and Glencore also rose, boosted by data showing that deflationary pressures had eased in China, which is the world's biggest consumer of metals. However, shares in housebuilders such as Berkeley Group, Barratt Developments, Taylor Wimpey and Persimmon all fell.
Traders said the housebuilding and property sector was being hit by concerns about UK economic growth and a slowdown in the London prime property market, which could be exacerbated if Britain voted in June to leave the European Union - a scenario known as Brexit. "The housebuilders are bearing the brunt of some of those Brexit fears," said Beaufort Securities' sales trader Basil Petrides. Traders also pointed to the fact that the FTSE was failing to get above the 200-day moving average level - a technical point showing a stalling in its recent rally.
"I wonder how much conviction there is to the recent move higher. The FTSE appears to be losing a bit of momentum," said Admiral Markets' Darren Sinden. The FTSE is down around 1 percent so far in 2016, and some 13 percent below a record high reached in April 2015, as concerns about a China-led global economic slowdown knocked back world stock markets.