City traders were spooked by a US report from the Association of Realtors that showed that sales of existing homes in America unexpectedly fell 2.7% in August, while Harm Meijer, property analyst at JP Morgan, added to fears when he said the property stocks had rallied too far.
Wolseley stock was under pressure after brokers from Royal Bank of Scotland advised clients to sell the shares ahead of this Monday's results. "Wolseley has rallied way ahead of our expectations with the new chief executive's appointment and the general play into beat-up cyclicals. We, however, remain convinced consensus earnings expectations for 2010 are way too optimistic," said one salesman at RBS.
"Critically, we expect Ferguson (the remaining North American business) to be suffering more dramatically from non-residential decline, which is accelerating and drives over 50% of 2010 sales." House builder shares also came under pressure amid talk of further fundraisings: Persimmon fell 26.2 to 464.7p and Bellway lost 52 to 833p.