London - British shares advanced on Wednesday as investors warmed to housebuilders ahead of Finance Minister George Osborne's planned increase in spending on the housing sector.
Finance minister George Osborne is set to announce an increase in spending on housing to support the construction of around 400 000 new homes as part of the autumn spending review, due to be presented at 12h30 GMT.
Taylor Wimpey, Persimmon, Barratt Developments and Berkeley Group were all trading up between 3.5 percent to 5.4 percent, while mid-cap Zoopla was also up 0.5 percent, and estate agent Foxtons Group advanced 3 percent.
“The housebuilders have done pretty well recently anyway, so they've got a bit of wind in their sails,” said Laith Khalaf, senior analyst at Hargreaves Lansdown, noting the importance of the sector to the British economy.
“As long as interest rates remain low, it's hard to see what's going to stop that,” he added.
The Thomson Reuters UK homebuilding index rallied 4.4 percent.
The UK blue-chip FTSE 100 was up 0.9 percent at 6,333.07 points at 09h38 GMT, slightly underperforming the broader European market.
The travel and leisure sector, despite growing tensions in the Middle East and the downing of a Russian warplane near the Syrian border, was pushed higher by a rally in mid-cap Thomas Cook's shares.
The British holiday company soared 9.5 percent after reporting results in line with expectations and saying that it was confident in its outlook for 2016, despite cancelling holidays in Egypt after the UK suspended flights to a major resort.
The possible resumption of dividend payouts in 2017 also helped lift the stock.
The FTSE 350 travel and leisure index advanced 1.8 percent.
Yet some analysts were not so positive on the outlook for the stock, citing concerns over the perceived security of certain destinations.
“We also expect the UK to face a later booking profile as there are simply too many destinations with perceived threats at this time,” analysts at HSBC wrote.
At the bottom of the index, miner Anglo American fell 6.6 percent after a downgrade from HSBC, cutting their rating on the stock to “reduce” from “hold”, saying that cost and dividend cutting might not stop the cash burn at the company.
Fellow miners BHP Billiton, Glencore and Antofagasta were also pulled lower, down between 0.1 percent to 1.6 percent.
REUTERS