Weak Chinese data, disappointing company updates from the likes of Barclays, concerns about the growing problems in Ukraine and uncertainty over Pfizer's bid for AstraZeneca have all combined to put investors in a cautious mood following the long bank holiday weekend.
But housebuilders are bucking the trend, not least because of the continuing rise in prices, particularly in the south east. The latest trigger was a positive report from analysts at Barclays. The bank raised its target price on Persimmon, up 49p to £13.76, from 1333.6p to £15.40 and was also positive on Redrow, 0.6p ahead at 305.6p. It said:
Against an improving backdrop, the recent sell off of house builders warrants close attention. We see strong fundamentals: greater visibility provided by the extension to the Help to Buy scheme; a largely disciplined land market; and a more supportive planning system. Where headwinds exist, notably the threat of rising interest rates, they remain relatively benign in our view, and 2016 valuations look highly attractive.
But overall the FTSE 100 has fallen 23.09 points to 6799.33, with traders ignoring better than expected UK and European service sector figures.
Following Chinese manufacturing data missing forecasts over the long weekend, mining shares have come under pressure. Anglo American is down 34.5p at 1530.5p, not helped by news that strike action at its South African platinum mines is set to continue.
BHP Billiton has fallen 38.5p to 1892.5p while Rio Tinto has dropped 53p to £31.94.
Barclays has lost 11.8p to 246.7p after its first quarter profits fell 5%, while Aberdeen Asset Management is down 21p at 424.9p - the biggest faller in the leading index. The investment management group reported a 3% decline in first half profits as customers pulled money out of its emerging market and Asian equity funds.
AstraZeneca has slipped 69.5p to 4738.5p, as it announcing it had won US approval for its new heart disease pill Epanova, providing a piece of good news in its fight against Pfizer's £63bn bid.
Among the mid-caps Balfour Beatty has slumped 52.8p or 18% to 233p after another profit warning, prompting the departure of chief executive Andrew McNaughton.
