FTSE eases from 11-month high as oil and housebuilders retreat

© Reuters. The London Stock Exchange is seen during the morning rush hour in the City of London

By Kit Rees and Atul Prakash

LONDON (Reuters) - Britain's top share index edged lower on Wednesday after climbing to an 11-month high in the previous session, with housebuilders giving up some of their recent gains and energy shares dragged lower by weaker oil prices.

The FTSE real estate index (FTUB8600) edged 0.6 percent lower after rising for four straight sessions. Shares in Taylor Wimpey (L:TW) and Berkeley Group (L:BKGH) fell 0.7 and 2.7 percent respectively.

Barratt Developments (L:BDEV) dropped over 2 percent, after Britain's biggest housebuilder said it might slow the pace of construction and rethink its land buying programme to prepare itself for an expected slowdown sparked by the Brexit vote.

"The market is concerned the housebuilding sector could be in the firing line as a result of the Brexit vote, and while Barratt have plans in place to reduce risk, it’s unlikely these could fully insulate the group from a nasty downturn," George Salmon, equity analyst at Hargreaves Lansdown (LON:HRGV), said.

The UK oil & gas index (FTNMX0530) fell 1 percent, tracking a fall in crude oil prices after bearish U.S. stock data added to renewed concerns over a global oil glut. Shares in BP (L:BP) and Royal Dutch Shell (L:RDSa) fell 1.3 percent and 0.9 percent respectively.

The internationally-exposed FTSE 100 index (FTSE) was down 0.2 percent at its close, while the mid-cap index (FTMC), dominated by domestically-focused companies, was flat in percentage terms.

The blue-chip FTSE 100 is still up about 5 percent since the result came through on June 24 that Britain had voted to quit the European Union. Mid-cap companies, which are more sensitive to domestic policies and economic conditions, are down 3.4 percent.

However, the FTSE 100 index, which is dominated by global companies, is down 6.6 percent in U.S. dollar terms in that period, due to the sharp fall in sterling on concerns that the Brexit vote could lead the country into recession.

On the positive side, shares in luxury goods group Burberry (L:BRBY) jumped 6.3 percent to a 3-month high after its results slightly beat expectations and it said that it expected a post-Brexit drop in the pound to boost its earnings this year.

Some investors were more cautious on Burberry's prospects.

"The external environment remains challenging with slowing demand from travelling customers and Chinese spend globally in addition to drastically deteriorating wholesale orders," analysts at Jefferies said in a note, rating the stock a "hold".

Shares in small-cap retailer Poundland (L:PLND) surged 12.6 percent after South Africa's Steinhoff (DE:SNHG) agreed to buy the British company for 597 million pounds ($793 million) in cash.

"The recommended cash offer is a good result for Poundland shareholders and comes at a time when there was more downside risk than upside in our view. The cash offer of 222 pence is highly attractive and we would advise shareholders to accept," Liberum analysts said in a note.

Miners Antofagasta (L:ANTO) and Glencore (L:GLEN) were also in demand on the back of a rally in copper prices, gaining 3.7 percent and 0.5 percent respectively.