(Sharecast News) - London stocks ticked higher in early trade on Monday, with housebuilders surging on news of a new Help to Buy-style scheme, and as oil prices rose after US President Donald Trump rejected an Iranian proposal for a seven-day truce that would have led to the reopening of the Strait of Hormuz.
At 0830 BST, the FTSE 100 was up 0.3% at 10,724.17, while Brent crude was 2.6% higher at $106.98 a barrel and West Texas Intermediate was up 2% at $94.24.
Conditions of the Iranian proposal included the US release of frozen Iranian funds, the lifting of oil sanctions and an end to its naval blockade on Iranian ports.
Susannah Streeter, chief investment strategist at Wealth Club, said: "Inflationary worries are back front and centre at the start of the week as energy costs surge higher again after President Trump dashed hopes for immediate progress in talks aimed at breaking the deadlock in the Iran crisis.
"Brent Crude has surged above $107 a barrel, and government borrowing costs have been on the rise again. Investors are bracing for interest rate hikes, with central bankers expected to move to stop the price spiral from becoming embedded. The worry is that the longer oil and gas prices stay elevated, the greater the chance that they will be passed on to consumers via higher costs of goods and services.
"It seems it's back to the drawing board again for talks after the US President turned down Iran's latest terms for reopening the Strait of Hormuz more fully. There are talks planned for later this week, but it seems that these negotiations are set to be long and drawn out, with hopes for a resolution before the US mid-term elections fading fast."
In equity markets, housebuilders surged following news over the weekend that there would be a new scheme to help first-time buyers including a loan of around 20% of the value of the property. Barratt, Taylor Wimpey, Vistry, Bellway, Persimmon and Berkeley all gained sharply.
The Your First Home scheme, to be announced before the Labour Party conference this week, will enable purchases of newbuild properties with a deposit of 2.5% and a government-backed equity loan worth 20% of the property's value.
Richard Hunter, head of markets at Interactive Investor, said: "An additional boon came from the government announcement yesterday that plans were in place to simplify the takeover of empty homes by councils to provide them to those people most in need.
"The housebuilding sector has been beleaguered by a raft of headwinds ranging from higher mortgage rates and strained affordability to a slow planning process for new homes and the announcements have provided a rare and overdue relief rally from investors."
On the downside, Fresnillo, Antofagasta, Anglo American, Glencore and Hochschild all fell in tandem with gold and copper prices.
Ladbrokes-owner Entain lost ground as it trimmed its full-year guidance after Brazil banned online sports betting and gaming.
Bodycote also fell as CVC said it was not planning to make another offer for the company, which agreed earlier this month to be bought by US private equity firm Veritas Capital in a £1.65bn deal.
Market Movers
FTSE 100 (UKX) 10,724.17 0.27%
FTSE 250 (MCX) 24,494.16 0.96%
techMARK (TASX) 6,183.43 0.05%
FTSE 100 - Risers
Barratt Redrow (BTRW) 352.70p 13.95%
Kingfisher (KGF) 341.20p 3.75%
Centrica (CNA) 150.90p 2.37%
SSE (SSE) 2,498.00p 2.08%
Marks & Spencer Group (MKS) 381.30p 1.82%
Games Workshop Group (GAW) 17,860.00p 1.76%
JD Sports Fashion (JD.) 78.92p 1.73%
Severn Trent (SVT) 3,098.00p 1.44%
United Utilities Group (UU.) 1,421.00p 1.43%
Reckitt Benckiser Group (RKT) 4,970.00p 1.37%
FTSE 100 - Fallers
Fresnillo (FRES) 2,734.00p -5.33%
Antofagasta (ANTO) 3,602.00p -3.32%
Anglo American (AAL) 3,931.00p -2.75%
Glencore (GLEN) 549.20p -2.12%
Rio Tinto (RIO) 6,957.00p -1.79%
Rentokil Initial (RTO) 304.00p -1.39%
Computacenter (CCC) 5,340.00p -1.29%
Rolls-Royce Holdings (RR.) 1,472.80p -0.93%
Experian (EXPN) 2,587.00p -0.77%
Weir (WEIR) 2,626.00p -0.68%
FTSE 250 - Risers
Vistry Group (VTY) 300.40p 16.91%
Persimmon (PSN) 1,337.00p 15.63%
Taylor Wimpey (TW.) 92.36p 14.98%
Bellway (BWY) 2,364.00p 14.51%
Breedon Group (BREE) 337.60p 9.99%
Genuit Group (GEN) 294.00p 9.86%
Travis Perkins (TPK) 644.50p 7.60%
Grafton Group Ut (CDI) (GFTU) 1,021.60p 5.99%
Berkeley Group Holdings (The) (BKG) 3,574.00p 5.93%
Howden Joinery Group (HWDN) 797.50p 4.87%
FTSE 250 - Fallers
Hochschild Mining (HOC) 531.50p -7.01%
Pan African Resources (PAF) 117.60p -4.70%
Endeavour Mining (EDV) 4,318.00p -4.53%
Playtech (PTEC) 375.60p -3.65%
Bodycote (BOY) 917.50p -2.96%
Baltic Classifieds Group (BCG) 2.00p -2.44%
Entain (ENT) 441.70p -1.71%
Ceres Power Holdings (CWR) 407.60p -1.53%
Sequoia Economic Infrastructure Income Fund Limited (SEQI) 84.00p -1.41%
Ashoka India Equity Investment Trust (AIE) 247.00p -1.40%
25.94 (0.24%)
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