London shares were again swayed by speculation over the Bank of England's interest rate decision tomorrow, with new data showing falling house prices and a slowing service sector encouraging hopes of a cut.

Housebuilders, having led the fallers yesterday on fear of rates being held, now led the FTSE 100 up on hopes that the Monetary Policy Committee would be forced to cut rates. By 11.47am the index was up 80.7 at 6,396.5.

Taylor Wimpey and Persimmon were amongst the top gainers, both up 3.8 per cent at 194.4p and 787.5p respectively. Liberty International, the owner of shopping centres, was up 4 per cent at £11.33 and Kingfisher, owner of B&Q, gained 3 per cent to 155.8p.

Northern Rock continued to drop, off another 2 per cent at 101p on reports that the Government was preparing a privatisation plan should bids fail.

Debenhams was the top mid-cap faller, down 2.8 per cent at 86½p after Moss Bros issued a profit warning and Goldman Sachs cut its target price on the department store group to 99p. Dresdner Kleinwort cut Debenhams' profit forecast by 12 per cent.

Moss Bros fell 14 per cent to 32½p. Analysts at Numis said the warning was bad news for Debenhams, Woolworths and Marks & Spencer.

Game Group soared 16 per cent to 208½p after the Competition Commission cleared the acquisition of Gamestation.

Clapham House, the owner of Tootsies, Gourmet Burger Kitchen and The Real Greek chains, bounced another 15p to 177½p following Monday's profit warning. There is talk of stake building by a potential bidder. Investec issued a buy note with a 241p price target, saying the GBK brand was doing well and Tootsies could be revived.

Asos, the online fashion retailer gained 7½p to 189½p after it unveiled a doubling of revenues and soaring interim profit. That helped the online hamper retailer Findel to jump 6.5 per cent to 618p.

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