Market Report: Persimmon takes a hit on more housing pain

Life gets no better for the builders. Dire figures on June mortgage approvals, which are at their lowest levels since 1993, added to the gloom. Few in the industry, which has been shedding workers as fast as it can print P45s, can see any relief for at least a year or so.

Persimmon took the brunt of yesterday's falls, losing 22p at one stage before ending the session 1.5p lower at 311.5p after broker Panmure Gordon cut its recommendation from hold to sell. The shares have lost 71 per cent of their value over the last year. The broker said the shares had jumped too far and too soon from their recent lows, especially as the market is likely to stay depressed for the foreseeable future.

The FTSE 100 managed to shrug off another bad night on Wall Street – which had ended with the Dow's second loss of more than 200 points in three sessions – and, after a lukewarm start, gathered pace during the day, helped by a much needed rebound in the US. But it failed to hold on to a 42-point gain and ended 6.6 points higher at 5,319.20.

Wall Street was ahead by nearly 130 points in early dealings as traders responded positively to a drop in oil prices and a rise in consumer confidence.

British Airways gained 14p at 248.5p on its plans for an all-paper merger with Iberia, the Spanish airline. The boards of both airlines have unanimously supported the tie-up, which comes as airlines come under greater pressure to contain costs. BA has had a stake in Iberia since 1999.

BP's blockbuster second-quarter earnings, fuelled by high oil and gas prices, grabbed the early headlines but early gains evaporated as Dresdner Kleinwort said the numbers benefited from a number of issues, such as a tax rate of only 35 per cent. Even so, broker Cazenove stuck to its outperform recommendation on the shares, which finished 12.75p easier at 506.75p.

Continuing worries over the health of the US financial sector spurred more selling of banks, with Barclays losing 14p at 324.75p. Royal Bank of Scotland was down 5.5p at 200p, and HBOS off 14p at 272p as rumoured bidders scurried for the exit. Vodafone's new chief executive, Vittorio Colao, who took over at yesterday's annual meeting, said afterwards that he did not expect economic challenges would necessarily slow the company down. The mildly upbeat view should rebuild some confidence in the company, which has been dented by worries about a fall-off in business in parts of Europe. The shares gained 4p at 133p.

Rising metal prices continue to fire up the miners – Antofagasta added 8.5p at 548p and Anglo American gained 50p at 2,800p. Vedanta Resources gained 37p to 1,889p after its first-quarter results beat expectations with record output of iron ore. Morgan Stanley retained its overweight rating on the stock.

The motor dealer Inchcape, which has been making big inroads into the thriving Russian market, stalled after it warned sales growth was slowing and profit for the year would be in line with last time. The price came back 37p to 258p.

ITV lost further ground as recent talk of a bid from Bertelsmann began to fade. The shares finished 1p easier at 43p, having lost more than 56 per cent of their value over the past year.

Speciality chemicals group Croda International gained 12p to 673p after delivering a 64 per cent increase in first-half profits and saying it was on track to make further progress for the rest of the year.

Tesco was slightly weaker at 273p, down 2p, after agreeing to buy out Royal Bank of Scotland's 50 per cent holding in its personal finance business for £950m. Seymour Pierce said the price looked on the expensive side. Bid rumours continue to swirl around J Sainsbury, up 2p to 325p. The Qatar Investment Authority, the sovereign wealth fund, has nudged its holding up to 27.3 per cent, moving ever closer to the benchmark 29.9 per cent level which would oblige it to make a full offer for the £5.6bn chain.

The conferences and events organiser Informa jumped 13p to 437p after it announced yet further bid interest. The company said it had received a preliminary approach from another party, joining the queue formed by a private equity consortium led by Providence Equity, which has made a 506p offer worth more than £2bn. This week, Informa posted a 10 per cent rise in first-half adjusted pre-tax profits.

Oilex fell 5p to 45p on profit-taking after announcing the start of work on the Cambay-73 oil and gas prospect in Gujarat, north-west India. Oilex has a 30 per cent stake, with 55 per cent held by the Gujarat State Petroleum Corporation.

Project engineer Bateman Litwin plunged 47 per cent to 84p after a profit warning. A new chief executive has taken control and given the boot to a number of less profitable contracts which should improve pros-pects. But for now, profits will fall from an expected $35m to between $15-20m.