Energy companies hit as winter gas price drops

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The fall in the price of gas for December delivery began earlier in the week but mushroomed yesterday, when the price fell by 27 per cent at one point. That meant electricity prices were also sent sharply lower, and companies such as British Energy and Scottish Power suffered. British Energy, the nuclear generator, was the worst-performing mid-cap, down 29.25p to 405.5p. Scottish Power dipped 3p to 496.75p, and its compatriot Scottish & Southern Energy was 11p lower at 966.5p.

But Centrica was an investor favourite. The company owns British Gas and, although it has been building up its own gas producing assets, these still account for only 25 per cent of the demand from British Gas customers. Its shares have been under pressure because rising gas prices mean it has to put up prices, and customers have been deserting the company. With the phenomenon easing yesterday, the stock jumped 5.75p to 230p.

The energy market turmoil extended to the new market for carbon emission permits, which staged its biggest one-day fall. The permits allow companies which reduce pollution by more than the level demanded by the Kyoto treaty to sell that saving to companies which will not. Shares in AgCert, a little company whose technology reduces the environmental impact of farmyard waste and whose profits are related to the value of the emission permits it thus creates, slid 7.5p to 232.5p. shares in Trading Emissions, an investment company set up to buy permits, stalled at their record level of 114.5p.

The wider equity market maintained its sunny disposition, thanks to massive inflows of cash into the heavyweight banking sector. The prospect of lower interest rates has encouraged investors to expect stronger new lending and lower bad debts in the months to come. Barclays - always tipped as the most likely of the big four to attract a takeover bid - was in particular demand. In almost twice the normal volume of trading, its shares rose 6.5p to 577.5p. Royal Bank of Scotland was 30p firmer at 1, 768p. Northern Rock, tipped by Goldman Sachs this week, was up another 9p to 832.5p. And CSFB won the battle of wills over Standard Chartered, when investors took more notice of its positive note on the Asia-focused bank than of Panmure Gordon's "sell" advice, in which it feared that the acquisition of Korea First bank will fail to generate the profit growth implied by the share price. That price was up 14p by the end of the day to 1,090p.

The latest rally has taken the UK stock market, as measured by the FTSE All-Share index, to within 20 per cent of its peak in 2000. The FTSE 100, up 13.8 points to 5,259.7 yesterday, is back within 25 per cent of its telecoms and technology-bloated peak on the eve of the Millennium.

Property shares were out of fashion, amid worries that the institutional investors who have pushed up commercial property values in recent years are starting fear a bubble has been inflated and are instead looking outside the UK. British Land, which has its annual shareholder meeting today and will issue a trading update first thing, was 12.5p lower at 883.5p. Land Securities (23p lower at 1,412p), Hammerson (off 15p at 879p) and Shaftesbury (down 14.25p to 373.75p) were among the other fallers.

NETeller continues to confound the sceptics. The business provides an "e-wallet" where online poker players deposit their cash. The business takes a cut, and gets paid by the gaming sites, too, who are happy that it takes on the risk of any fraud. Its flotation at 200p per share in April last year was greeted with the same sniffy response as was PartyGaming's more recent float, but the stock has soared. Yesterday, Numis became the latest broker to revise its assumptions. There will be faster customer growth, greater amounts of cash deposits, lower bad debts, and higher fees than Numis had previously been expecting - and an increased chance of these assumptions being raised even further. In short, "buy". NETeller shares jumped 62p to 724p, pennies away from a record, but still a long distance from Numis's fair value calculation of 960p to 1,392p.

PartyGaming, by the way, fell 2p to 149p yesterday, compared with its June float price of 116p; Empire Online, another poker business, was unchanged at 181.5p, compared with its float price of 175p; and FireOne, an e-wallet similar to NETeller, was unmoved at 338p compared with the 241p at which it was floated by Numis last month.