Share indices in the week to 8 June 2001
Ouch. It had to happen but it still hurt.

After a year of increasing share values, housebuilders have been brought back to earth with a thump thanks to a couple of notes from analysts warning investors that the good times may be about to end.

The sudden pessimism has dashed housebuilders' hopes that the City would rerate the sector.

The notes last week from Peel Hunt and Schroder Salomon Smith Barney said the outlook for housebuilders was not as good as earlier thought, given that interest rates may rise as the pound weakens.

This sparked a selling spree as many investors looked to offload their housebuilding stocks, including the sector's biggest names.

Hardest hit were Bellway, Persimmon, Wimpey, Wilson Bowden, Barratt, Wilson Connolly and Berkeley. The bloodletting continued this week, with all the stocks suffering.

As one City man said: "It's a tough world here. The housebuilders won't be rerated at the moment. Whether or not they deserve to be is another matter."