Shares in housebuilder Persimmon surge as much as 6.5 percent tolead a sector rally after the British government said over the weekend that itplans to extend a housing scheme to encourage construction until the end of thedecade.
Persimmon, Britain's largest houesbuilder by market value, jumps as high as1,398 pence, while rival Barratt Developments, the sector's biggest byvolume, rises by as much as 4.6 percent to 431.1 pence.
Smaller housebuilders such as Taylor Wimpey, Bovis Homes andBerkeley Group, meanwhile, all rise by between 1.6 percent and 4.5percent.
Finance Minister George Osborne said on Sunday the government would extendits Help to Buy scheme, which provides equity loans to buyers of newly builthomes, till 2020, up from an original end date of 2016.
The move will add a further 6 billion pounds to the programme, he said.Britain launched Help to Buy in April 2013.
"What it does is that housebuilders can plan a bit more longer term... Sothere isn't just a mad rush to beat the deadline and it gives a bit moresustainability to it," Cenkos Securities analyst Kevin Cammack says.
Housebuilders have been one of the biggest beneficiaries of the scheme as,unlike in previous programmes, they do not need to shell out any cash and theshore up in buyer demand has helped their homes to sell much quicker thanexpected.
The Thomson Reuters UK Homebuilding Index has surged 40 percent since March20 last year, when Osborne first announced the scheme.
"I think sustainability of the rally is probably longer. Whether they'llcontinue to power ahead as they had, I think you've probably removed some of thepotential vulnerability," Cammack said.
Reuters messaging rm://brenda.goh.thomsonreuters.com@reuters.net