REIT relief boosts property and helps FTSE to finish above 6,000

LONDON'S key index closed above the 6,000 mark yesterday for the first time since March 2001 as the City digested Chancellor Gordon Brown's tenth Budget. Property shares made the most running as the Chancellor overhauled his proposals for Real Estate Investment Trusts (REITs) so that developers wishing to convert to REIT status would have to pay a charge of just 2 per cent of the market value of the properties concerned compared with some estimates as high as 20 per cent.

It added more than 1.5 billion to the value of the UK's four largest property firms as shares in Land Securities surged 13 per cent, or 237p, to 2,080p, British Lan gained 12 per cent, or 138p, to 1,300p, Hammerson rose 9.2 per cent, or 110p, to 1,300p , and Liberty International also ticked up 85p to 1,225p. Slough Estates rose 13.4 per cent, or 81p, to 685p.

The FTSE 100 closed 16.2 points higher at 6,007.5, having fallen as far as 5,957.8 during the day. It had smashed through the landmark barrier several times since last Friday but yesterday was the first time it hung on to gains to close above 6000.

Analysts said that investors were relieved that Gordon Brown's Budget contained no major shocks.

Edward Menashy, economist and strategist at Charles Stanley, said: "The markets have looked on this as a very bland and political Budget - all the measures were fairly neutral.

"A lot of people said he might try to increase taxation in the first year after the general election and give himself room to spend more money ahead of the next election ... but it did not contain any negative surprises."

Shares in British Energy traded higher after Brown also said that the government was prepared to sell part of its stake in the nuclear power generator. Shares closed 2.8 per cent, or 18p, higher at 650.5p.

The broader market took heart from the minutes of the Bank of England's last interest rate setting meeting, which showed its monetary policy committee was split eight to one for the fourth month running in March, as expected, with Stephen Nickell again wanting to cut rates from 4.5 per cent.

Elsewhere, takeover speculation bolstered the market, with ICI climbing 4.8 per cent, or 16.75p, to 363.5p to within a whisker of its four-year high on speculation that US rival DuPont might be considering a bid. Neither ICI nor DuPont were immediately available to comment.

At these levels, ICI would be worth 4.3 billion which even for DuPont could be expensive.