Shares in Wolseley, the world's biggest plumbing and heating equipment merchant, have soared to a record high.

The news comes as the British plumber announced a sharp rise in its profits and said it was seeing signs of improvement in the US market.

Also on Tuesday, UK construction firm Taylor Woodrow reported healthy profits after the US market began to pick up.

Last year, the UK construction industry underwent a period of intense consolidation which included Taylor Woodrow's purchase of house builder Bryant.

Housing demand

Taylor Woodrow reported a 32% rise in annual profits to �202m ($288m; 327 euros), excluding one-off costs.

"We had a difficult year in North America [in 2001]. But things are picking up and are very encouraging," finance director Adrian Auer said.

And the group's chairman, Robert Hawley, said the company entered 2002 with one of the strongest forward order books in its history.

England faces a huge housing shortage, according to a new report by the Joseph Rowntree Foundation.

Unless more homes are built, it would lead to a shortage of 1.1m homes in 20 years, it warns.

And Taylor Woodrow is also hoping that slower house price growth will aid its business.

Plumbing opportunities

The healthy market for new house building is an essential ingredient of Wolseley's success.

The plumber posted a better than expected 17% rise in pre-tax profits for the six months ending 31 January.

And the group's chief executive Charlie Banks promised to spend �200m per year on acquisitions, with some deals likely to be announced before July.

Shares in Wolseley rose 6% to 700p, a record high which values the firm at �3.9bn.