December 21, 2017 / 9:46 AM / a year ago

FTSE edges up while leasehold policy proposal hits housebuilders

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* FTSE 100 up 0.1 pct

* Housebuilders hit by government leasehold proposal

* Oil majors, miners sustain index gains

By Helen Reid

LONDON, Dec 21 (Reuters) - Energy and mining stocks helped British shares edge higher on Thursday while housebuilders were hit by a government proposal to ban the sale of new leasehold homes.

The FTSE 100 gained 0.1 percent while mid-caps dipped 0.1 percent, weighed by a 10 percent tumble in McCarthy & Stone, Britain’s biggest builder of homes for retirees.

The Department for Communities and Local Government proposed to reduce ground rents on new long leases to zero.

McCarthy & Stone said it had made a case to DCLG for the exemption of retirement housing providers from the policy.

Large-cap housebuilders Persimmon, Berkeley Group , Barratt Development and Taylor Wimpey also fell 1.2 to 1.6 percent.

Gains in oil majors BP and Shell kept the FTSE 100 afloat as crude prices stayed firm, while miners Glencore and BHP Billiton also made gains.

Heavyweight tobacco firm British American Tobacco was the biggest boost to large-cap stocks, recovering from the previous session’s losses as investors calculated the extent to which U.S. tax reform could help U.S.-exposed companies.

Gains overall in the market were muted as investors broadly felt the benefits had already been priced in.

While strong energy and materials sectors have helped the FTSE deliver the strongest earnings upgrades of all major European benchmarks this month, concerns over Brexit negotiations and a faltering economy held investors back.

“On one hand you’ve got what seems to be some progress being made on the Brexit front,” said Mike Bell, global market strategist at JPMorgan Asset Management. “On the other hand the economic data is showing signs of non-negligible weakness.”

British consumer morale sank to a four-year low this month, bucking economists’ expectations for it to hold steady and extending this year’s downward trend as inflation crimped household spending, Gfk data showed.

“UK consumer confidence is continuing to fall, in sharp contrast to pretty much everywhere else in the world,” said Bell. “It could be that we are at the worst point, but certainly when you contrast it with other regions there’s a stark divergence and that leaves us neutral on UK equities.”

Builder Balfour Beatty bucked the sector trend, its shares gaining after the firm nudged up expectations for year-end profit, saying the sale of 12.5 percent of its stake in M25 motorway operator Connect Plus would boost its bottom line and generate funds to pay down debt. (Reporting by Helen Reid; Editing by Alison Williams)

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