Okay, you were right about the CFLAGS, thanks for pointing me in the right direction, they were overridden in my environment for some reason. I cleared them and now it compiles properly.
However, "make install" complains about missing "./mkdist"
Code:
make[5]: Leaving directory '/work/tmp/binutils/build/ld'
make[4]: Leaving directory '/work/tmp/binutils/build/ld'
make[3]: Leaving directory '/work/tmp/binutils/build/ld'
make[2]: Nothing to be done for 'all-target'.
make[2]: Leaving directory '/work/tmp/binutils/build'
make[1]: Leaving directory '/work/tmp/binutils/build'
touch build/.morphos-build-stamp
./mkdist
make: ./mkdist: Command not found
make: *** [Makefile:38: dist/.morphos-dist-stamp] Error 127