Housebuilders up on job cut news

Housebuilder shares are down sharply since the beginning of 2007

Shares in UK housebuilders have rebounded after Redrow and Bovis Homes announced job cuts and cost savings.

The measures followed similar action by larger rivals Persimmon, Taylor Wimpey and Barratt Developments as slumping home sales squeeze earnings.

Shares in Barratt jumped 38.5%, followed by Taylor Wimpey up 16.4%. Bellway and Persimmon also gained.

Analysts said the market viewed the cost-cutting moves as necessary to ride out the downturn.

"The stock market responds well to companies which take remedial action when they are in trouble," said David Buik, a partner at BGC Partners.

He added that cutting costs made it more likely that the housebuilders would meet their banking covenants, a factor that would reassure investors.

However, the share prices are rallying from a very low base after a catastrophic 18 months or so for housebuilders, with share values collapsing by 70%-80% in that time.

While shares in Barratt Developments closed more than a third higher at 54p on Wednesday, in February 2007 they were trading at 1,289p.

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