Although the announcement of a slowdown in consumer spending last week reinforced fears about the state of the UK economy, construction fared reasonably well.
Shares in the sector rose modestly, by 1.2% to 3741, despite the general gloom. In the USA the devastation in New Orleans caused by Hurricane Katrina boosted construction shares because of expectations about recovery and rebuilding opportunities. Some British firms will no doubt land a proportion of this work.
However, the success of the best-performing company in the sector can be attributed to a more predictable cause – takeover talk.
Shares in Pilkington, the glass maker, closed up almost 10% to 139.5p at the end of the week on the back of persistent rumours that it is a takeover target of Nippon Sheet Glass, which owns 20% of the firm.
Meanwhile, FTSE 100 companies Hanson and Wolseley did well, rising 3.7% to 593p and 2.7% to 1170p respectively.
Kier Group, which has been a strong performer since the beginning of the year, was another star. Shares in the company, which has recorded strong profits and has had a stream of contract wins, rose 5% to 953p as it continued to be favoured.
Despite the continued weakness of the housing market, share movements among the housebuilders were unremarkable, although Redrow, itself the subject of much merger speculation, did move up 2.3% to 419.5p.
In the support services sector, shares in Amec fell by almost 3% to 349.5p. The company is expected to be involved in reconstruction work in New Orleans but that prospect was not enough to offset concern about late payment of bills and debt levels, which were revealed when Amec reported its interim results.
Under the new International Financial Reporting Standards, Amec’s pre-tax profit remained flat at £35m for the six months to 30 June. However, the company said that before taking IFRS into account, underlying pre-tax profit would have stood at £41m, up 7%. It continues to focus on oil and gas and technical services, which are the main drivers of Amec’s profit growth.
The All-Share outperformed the construction sector, up by almost 2% to 2675.
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Angela Monaghan is business editor