With Royal Bank of Scotland's rights issue finally unveiled - albeit at a hefty top-of-the-range figure of £12bn - banks are unsurprisingly under pressure. And with a negative note from Merrill Lynch, so are housebuilders.
Despite RBS widely flagging its cash call, its shares have still fallen, down 13.25p to 359.25p. Investors are now trying to spot which will be the next bank to call on shareholders for money. So HBOS is 23.5p lower at 516.5p, while Barclays has fallen 20.5p to 458p.
As for the builders, Persimmon has lost 34.5p to 664.5p, Taylor Wimpey 8p to 151.75p, and Barratt Developments 15.75p to 349.5p. Morgan Sindall fell 52p to 980p after the low cost housing and property group issued a downbeat outlook statement.
Merrill's analysts, after a four-day road trip visiting 60 new home sites in southern England, have come up with some gloomy conclusions.
They said: "Critically, rather than stabilise as we had previously anticipated, the key spring selling period has seen a further deterioration in the mortgage lending environment. And the timing of this could hardly have been less propitious. Moreover, even if we do see an easing in the tight lending environment as we enter the summer, it will have limited impact on short-term activity levels.
"We have consequently decided to pull back our assumptions reflecting this deterioration in the housing market. Specifically, we now cut our 2008 industry volume expectation from a 15% fall to a 25% drop, and we now assume no volume growth in 2009 versus our previous 5% growth expectation. We also pull back our house price expectations and now envisage that UK prices will likely deteriorate 5% in each of 2008 and 2009."
But after an early dip, the FTSE 100 is now in positive territory - just - after good performances from commodity companies. The soaring oil price has lifted BG 18p to £12.98p, Cairn Energy 71p to £30.86 and Tullow Oil 15.5p to 736.5p, while miners are also wanted. Eurasian Natural Resources has risen 60p to £12.66, Rio Tinto 112p to £63.49 and BHP Billiton 30p to £18.75p.
Among the mid-caps, engineer FKI has jumped 8% to 84p after it agreed a cash and share offer from industrial investor Melrose. And a positive update from Moneysupermarket has seen its shares climb 6.25p to 111.5p.
