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Market Watch

FINANCE

SHARES in McCarthy & Stone edged up only slightly early this week as bidders for the retirement home builder started coming out of the woods.

Reports put privately-owned investment firm Augusta Capital and private equity group Permira in the running, with a price tag of £1 billion bandied around.

This would make McStone the largest takeover in the housing sector, outstripping the £634 million paid for Westbury by Persimmon .

So far, the quoted, land-hungry housing giants appear to be less interested in McStone, whose stock surged 15 per cent in the run-up to confirmation of bid talks.

The stock is short of its year high of 907.5p and at present levels would value the business at closer to £900 million.

With listed companies seemingly out of the running, this suggests views on the housing market remain uncertain, even though the Bank of England kept interest rates unchanged last week.

This prompted some analysts to take a look at a sector that has seen substantial gains over the past year, despite a wobbly housing market.

The FTSE Home Construction index is up 45 per cent on a year ago and UBS raised its overall view of the sector to 'overweight.

Deutsche Bank took a view on the sector and upgraded Taylor Wood row and Wimpey from 'hold' to 'buy'.

Despite this, both were among the week's biggest losers, along with Persimmon - rated a 'hold' up to a target price of £12.24.