UPDATE 2-Builder Galliford Try reassures on debt, shares jump

(Adds more CEO, analyst comment, updates shares)

By Myles Neligan

LONDON, July 3 (Reuters) - British construction company Galliford Try Plc (GFRD.L: Quote, Profile, Research) reported lower-than-expected debt on Thursday, strengthening its financial position as the housing market deteriorates, and sending its shares sharply higher.

Galliford, which builds public sector facilities and private homes, said it had been able to cut its net debt to less than 5 million pounds ($9.9 million) by the end of June through aggressive sales of stockpiled properties and retrenchment in its housebuilding activities.

The figure fell well below market expectations of up to 100 million pounds, analysts said, and gives the group the option of buying land cheaply from more heavily-indebted rivals next year.

"Next year, we expect significant net cash, allowing (Galliford) to buy land at swingeing discounts from distressed sellers," Dresdner Kleinwort analyst Alastair Stewart wrote in a research note.

By 1225 GMT, Galliford shares were up 11.5 percent at 36.25 pence having underperformed the FTSE All Share Construction and Materials index .FTASX2350 by 53 percent since the start of the year and the FTSE All Share Household Goods index .FTASX3720 by 46 percent.

Galliford's larger rivals Taylor Wimpey (TW.L: Quote, Profile, Research) and Barratt Developments (BDEV.L: Quote, Profile, Research) are each weighed down by a debt burden of 1.7 billion pounds, a figure that far exceeds their market capitalisation.

The housebuilding sector has been hit by an abrupt sales downturn as banks hike mortgage costs in the wake of the global credit cruch, deterring buyers and forcing prices lower.