Market Report: Electricities dim following National Power's surge

National Power is baffling even the most hardened stock market professionals. On Friday, Britain's biggest generator electrified investors by announcing a special 100p a share dividend, worth 125p a share to tax exempt institutions, and a 49 per cent increase to 23p in the ordinary dividend.

The shares were standing at 516p ahead of the dividend declaration; they zoomed to 547p and have been in decline since, falling 8p to 520p yesterday.

Its a remarkably dim performance for a share harbouring such a big dividend payment. Either the market takes the view the shares are really worth around 410p or someone, somewhere has got their wires crossed.

It is true NP enjoyed a huge surge ahead of the special payment announcement. But the excitement was due to a possible American takeover bid which Ian Lang, the Board of Trade president, appeared less than keen to endorse.

An explanation for the share performance is difficult to elicit. There is the usual talk of technical factors with a suggestion income funds have been so inundated with cash this year they decided to sell rather than have their dividend coffers overwhelmed by NP generosity. "Don't forget", said one trader, "the income funds do not want to be swamped this year in case it makes next year's display look too bad".

There is also a worry the Government could be influenced by the outcry which followed the announcement and move to block the payment. After all Whitehall is, directly and indirectly, making life so difficult for the privatised utilities that the market is asking who is running the companies, the directors or the regulators and Government.

NP, blocked by Mr. Lang from bidding pounds 2.5bn for Southern Electric, will claim much of the hand-out cash from the sale of three power stations to Eastern, the Hanson owned utility.

NP is also, probably, suffering from the market's growing disenchantment with utilities as regulatory influences make life increasingly difficult for the privatised groups.

National Grid, seen as a sitting duck for a regulatory blast, fell 6p 177.5p, a low since the 228p flotation late last year. The share fall throws a more favourable light on the ability of Hanson to get out at the right time. It sold, in a controversial deal, its 12.5 per cent Grid stake to James Capel at 192.5p a share; a price regarded at the time as ludicrously cheap.

Other electricities faded; old takeover favourites Yorkshire lost 23p to 707p and London Electricity 27p to 702p. Waters, where there are also fears of regulatory pain, sunk with Anglian down 17p at 518p; Thames 9p at 542p and United Utilities 10p at 548p.

Thorn EMI was given spin as the market debated the proposed demerger. It is due to split in August with shareholders given details on 22 July.

The shares rose 17p to 1,813p, some 40p below their peak. The belief exists in some quarters that the demerger will be sandbagged before it can take place by a hostile bid. Others suggest once the music and rental sides are divided there will be a stampede to buy the music division with the rental side left to its own devices.

Sony, the Japanese giant, is the favourite to pre-empt the demerger with a pounds 22 a share offer. Break up valuations stretch from pounds 19 to pounds 23.

The FT-SE 100 index suffered a 25.2 points fall to 3,764.2, largely influenced by activity - or the lack of it - in the futures and gilts markets.

Bass, the leisure group, managed a 20p gain to 788p on its results and Kingfisher's upbeat trading statement was responsible for a 12p gain to 620p. Bio shares were mostly lower and oils succumbed to profit taking.

BTR was weak, off 4.5p to 290p, on worries of more bearish sentiment and Bank of Scotland lost some takeover froth, giving up 11p at 268p.

Allders gained 3.5p to 213.5p as Swissair duly put in a higher offer, around pounds 145m, for the group's duty free operations.

A pounds 130m offer from BAA, down 8p at 499p, has been accepted.

Lloyds Chemists was unsettled by a 4.2 million agency cross at 465p, falling 4p to 478p.

Jarvis, the construction group which has acquired British Rail's northern maintenance company for pounds 9m, zoomed 25p to 89p on its return. A placing and open offer will raise pounds 21.7m.

Glencar Exploration, with a slightly reduced loss of pounds 199,000, added 2p to 74p; it is planning a gold investment in Uganda.