Sunny with odd showers

Despite ups and downs, trading last week ended on a high note. Those companies that saw their share prices fall were very much in the minority.

Strong performances in the rest of the sector (housebuilders and contractors alike) drove the construction and building materials sector up 3.6% to 3357. This was one of the biggest rises in the sector in a single week since the beginning of the year.

On the downside, contractors, including Carillion, that are strong in PFI were hit mid-week by press speculation that the Office of National Statistics had recommended that government departments ought to include PFI capital expenditure on balance sheets, making it less appealing to the public sector and leading to a slowing of the flow of deals. However, this was quickly dismissed by the statistics office and other market commentators, and share prices recovered.

Carillion ended the week 3% up at 243.5p. Other contractors to do well included Kier, which rose 6.5% to 906.5p as it continued to be backed as one of the City鈥檚 favourites.

The worst performance came from Mowlem, which fell 1.4% to 178.25p, unable to ride the wave of steady optimism about consumer spending and the wider economy.

Housebuilders rallied too, partly on the back of an announcement by chancellor Gordon Brown in which he said the government would release hundreds of acres of public sector land on 700 surplus sites to the private sector for homes. While this does not magic away planning issues at the heart of housebuilder鈥檚 concerns, it shows some commitment from the government that it wants to achieve its ambitious targets.

The volume housebuilders had a strong week due to a perceived strong market in the UK and the USA. There wasn鈥檛 a single fall, and shares in Wimpey rocketed by almost 10% to 431.75p. Shares in Persimmon, the UK鈥檚 largest housebuilder, rose 5% to 751.5p.

Performances in the support services sector were unremarkable on the whole, although Jarvis was hit by a drop of almost 30% to 7.75p when it warned that it might have to further increase its debt.

The construction sector outperformed the All-Share last week, which rose 0.6% to 2492.

Angela Monaghan is business editor

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