Taylor Wimpey Share News (TW.)

LONDON (Alliance News) - UK equities closed firmly higher Monday, with the FTSE 100 snapping a six-day losing streak, as investors digested the latest developments from the crisis in Ukraine and held their nerve.

"It was a case of sell the rumour, buy the fact for financial markets after the referendum in Crimea at the weekend," said Kathleen Brooks, research director at Forex.com.

While the anticipation of the vote had prompted investors around the world to shed risk assets, including equities, last week, UK stocks markets have regained some of their losses Monday. The FTSE 100 closed up 0.6% at 6,568.35, the FTSE 250 closed up 1.1% at 16,297.38, and the AIM All-Share index closed up 0.1% at 870.75.

As expected, in a referendum held on Sunday, voters in the autonomous Ukrainian region of Crimea voted overwhelmingly in favour of rejoining Russia, after 60 years as part of Ukraine. Nearly 97% of voters who took part were in favour of Crimea seceding from Ukraine, news agencies quoted election officials of the southern region as saying.

Following this, an emergency session of the parliament of Crimea formally declared independence from Ukraine and decided to send a formal request to Moscow to join the Russian Federation "with the status of a republic".

The US and EU have reacted by placing travel bans and asset freezes against certain Russian government officials as well as Crimea-based separatist leaders.

"While an upsetting of the geopolitical status quo is typically treated as risk-negative by the markets because of the accompanying uncertainty, the referendum outcome was widely expected and so did not yield a sustained response from investors," said DailyFX analyst Ilya Spivak.

Positive sentiment also was evident in Europe and the US. The CAC 40 in Paris closed up 1.3%, while the DAX 30 in Frankfurt closed up 1.4%. Meanwhile, at the UK equity market close, the DJIA was up 1.1%, while the S&P 500 and the NASDAQ Composite were both up 1%.

However, "that the markets have made a positive start to the week does not detract from the threat of further unrest in Ukraine as attention now turns towards the Eastern border with Russia, and markets take stock to consider the impact of a protracted dispute that is unlikely to be settled anytime in the near future," warned Nicholas Dale-Lace, senior sales trader at CMC Markets.

The UK's large- and mid-cap indexes were further buoyed by a strong performance by its housebuilder constituents Monday. The FTSE 350 household goods sector, which includes the housebuilding companies, closed up 0.6% after UK Chancellor George Osborne said on Sunday that he would extend the first phase of government's controversial Help to Buy scheme by four more years.

"Recent months have seen significant levels of uncertainty regarding the fate of the scheme, with some commentators arguing it should be scaled back as part of Wednesday's Budget and others arguing for a tapering post the scheme's original end date of March 2016," said Jefferies analyst Anthony Codling.

However, ahead of Wednesday's budget, the Chancellor said that he would extend the first part of the programme, which makes buyers of newly built homes eligible for a 20% equity loan from the government on top of their 5% deposit, to 2020, instead of the original 2016. He said that an extra GBP6 billion would be put into the scheme, allowing a further 120,000 new homes to be built in England.

Osborne also announced a plan to ease the UK's housing shortage by building a garden city. The project in Ebbsfleet, on the Thames estuary in Kent, east of London, will build 15,000 new homes.

Blue-chip Persimmon closed up 3.7%, while FTSE 250-listed Bovis Homes Group, Crest Nicholson, Barratt Developments, Bellway, Taylor Wimpey, Redrow and Berkeley Group Holdings also were big gainers, closing up 4.7%, 4.3%, 3.1%, 2.3%, 2.1%, 2.1%, and 0.4%, respectively.

While the scheme has been undoubtedly positive for housebuilders, it has not been without controversy, with critics blaming it for making house prices unaffordable, a position given some support by the latest reading of the housing market by Rightmove.

The property website revealed that UK property prices rose to an record high in March, with the average asking price rising 1.6% from the prior month. The average asking price for a new property coming to market climbed to GBP255,962, up from GBP251,964 in February.

Away from the housebuilders, Polymetal International closed up 9.2%, placing it atop the leading gainers in the FTSE 250. Although the gold, silver and copper-mining exploration company announced significant falls in ore reserves and mineral reserves in 2013, it said it expects to record significant improvements in 2014.

At the other end of the spectrum, Essar Energy closed down 3.3% at 64.35p, making it one of the index's biggest fallers. The group's shares plummeted after Essar Global Fund reaffirmed its offer for the remainder of Essar Energy after the UK equity market closed on Friday.

Essar Global Fund's offer of 70 pence per share is the same price which Essar Energy's independent directors said in February undervalues the business. The directors immediately Friday responded by repeating their rejection of the offer. They said that they have not changed their view that 70 pence per share "materially undervalues the company and its future prospects." They said Essar Energy is worth at least 97p.

In the blue-chip index, food retailers Tesco, closing down 1.6%, J Sainsbury, down 0.7%, and WM Morrison Supermarkets, down 0.3%, were three of just 16 fallers Monday. The supermarkets, which rebounded on Friday, paring some of Thursday's losses made on the back of a weak earnings report by Morrisons, were once again big losers Monday. Tesco was the biggest loser after it was cut to Underperform from Neutral by Merrill Lynch.

Sainsbury's will again be in focus on Tuesday as it provides a fourth quarter trading statement.

In the forex market, the limited reaction in euro crosses versus central and eastern European currencies in the wake of the Crimean referendum reflects a wait-and-see mode as investors await further information, said Societe Generale analyst Kit Juckes.

The single currency did, however, edge lower in the aftermath of some weaker-than-expected consumer price inflation data for the eurozone. Eurozone inflation slowed in February to the level last seen in October, final data from Eurostat showed, growing 0.7% year-on-year in February, but slowing from 0.8% growth seen in January and missing economist expectations for an unchanged reading of 0.8%.

The data was especially disappointing given the preliminary reading of the data at the end of February was 0.8%.

However, the euro regained its losses as the dollar fell following an unexpectedly weak US housing market index reading. The report from National Association of Home Builders showed that the US homebuilder confidence rebounded by less than expected in March. The report said the housing market index inched up one point to 47 in March after tumbling ten points to 46 in February. Economists had been expecting the index to show a stronger rebound to a reading of 50.

At the close of the UK equity markets, the euro trades at USD1.3922, while the pound trades at EUR1.1949 and USD1.6645.

In the data calendar Tuesday, Chinese foreign direct investment information is released at 0400 GMT. Trade balance data for Italy and the eurozone are released at 0900 GMT and 1000 GMT, respectively, while German and euro area ZEW economic sentiment information is released at 1000 GMT.

In the US, building permits, consumer price inflation and housing starts data are scheduled for 1230 GMT, ahead of the Redbook index at 1255 GMT.

In the corporate calendar, FTSE 100-constituents Antofagasta and Resolution Limited are joined by FTSE 250-listed Cairn Energy and Xaar in releasing full-year results for 2013. Mid-caps Berkeley Group and IG Group Holdings provide interim management statements, while ASOS, the largest company on AIM, releases a second-quarter trading update.

By James Kemp; jameskemp@alliancenews.com; @jamespkemp

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