Market Report: Electricity companies among few bright sparks

ELECTRICITIES enjoyed the distinction of shining through the gloom. As most shares continued their bedraggled retreat, with higher interest rate fears eroding confidence, the electrical sector again put on an impressive display.

The FT-SE 100 index fell another 22.5 points to 3,014.8 after at one time giving the impression it was beginning to steady. But more acute depression in New York ensured any tentative enthusiasm was overwhelmed.

This month's pitiful retreat, which caught many experts on the hop, has now stretched to 236.5 points, a performance that throws into cruel perspective the so-called bull market run of 133.9 last month.

Another set of inflationary US figures did much of the damage. The American economy is clearly growing much more quickly than most observers expected and another interest rate increase looks inevitable.

London is now thinking in terms of a 7 per cent base rate by the year-end and Germany, despite moderately encouraging figures, still seems likely to join the higher interest rate bandwagon.

Such worries only tend to support the income-attractive electricities. Dividend growth, following the lenient restrictions proposed by the regulator, Professor Stephen Littlechild, is seen as 10 per cent a year until the end of the decade.

And the flotation of the National Grid will, the stockbroker Panmure Gordon suspects, be worth at least 150p, possibly 200p, per electricity share.

There is also the chance of takeover action. Defensive mergers in the industry are likely. Otherwise, the huge cash flows generated could tempt brash outsiders. Tomkins is regarded as the most obvious candidate to barge in with a generous offer.

Share buybacks have also contributed to the strength. Many electricity groups have taken advantage of the chance of buying in their shares and the laggards are expected to do so.

Eastern started the trend and others have since acquired shares through the market. South Wales, for example, picked up 250,000 at 817p, leaving the price 2p higher at 811p.

Northern, up 19p at 813p, stole the show. A day after announcing it intended to shed 800 jobs it started a buy-in for up to 10 per cent of its stock through Barclays de Zoete Wedd. In the event it gathered just under 10 per cent at prices between 812p and 818p.

The exercise, however, did not please everyone. Feelings were ruffled as some pension funds felt they had missed out. Selling through BZW, acting as Northern's agent, allowed some funds to save approaching 200p a share in tax.

It was suggested in some quarters that BZW had, not surprisingly, favoured its institutional clients. There was talk of those left out in the cold complaining to the Stock Exchange.

Inchcape, thought to be near to selling its Kennings car business, fell 7p to 400p. Grand Metropolitan shaded 2p to 399p as Societe Generale Strauss Turnbull downgraded by pounds 20m to pounds 940m for this year.

Great Universal Stores gained 12p to 537p after Hoare Govett dubbed the stock a 'trading buy'. Granada, making presentations, was firm at 484p and General Electric Co rose 1.5p to 282.5p in response to a Smith New Court push. Racal Electronic, an old bid favourite, rose 7p to 239p.

British Aerospace tumbled 26p to 445p following results but a former subsidiary, Aerostructures Hamble, suffered the sharpest reverse. A profit warning left the shares 50p lower at 73p. They were floated in June at 120p. The company was a management buyout in 1990.

Berkeley Business, the old Business Technology, was another bitter disappointment. Against hopes that the shares would return to market at 14p they failed to stir from their 8.5p suspension price. Seaq put volume at 4.1 million.

Attwoods, attempting to fend off an unwelcome bid from Browning-Ferris Industries, held at 117p. Another waste disposal group, Shanks & McEwan, fell 2.5p to 100.5p although FMR, the adventurous US investment group, appeared to scent it could be drawn into the bid battle, lifting its stake to 6.12 per cent.

British Petroleum lost 4p to 406p on stories of Russian resistance to the Azerbaijan oil development. Ramco Oil Services fell 18p to 226p.

Baldwin, the leisure group, firmed to 116p as David Kirch's Channel Hotels & Properties sold 6.56 per cent at 115p.

Middlesex Holdings held at 6p. It is forging a link with a New York-quoted financial group, Leucadia National, to supply metals to a smelting plant at Tadaz, Tajikistan. The Americans are expected to buy 29.4 million Middlesex shares at 7p. The Moscow Vozrozhdeniye Bank, which already has 27.6 million shares, wants to buy another 50.7 million at 5p.

Throgmorton has found a financing gap. Its Preferred Trust is issuing 2 million preferred shares to Bearing Power, the old Mining & Allied. The deal embraces warrants for shares at 25p against a 22.5p market price. Already it has achieved rewards from a similar deal with Hawtal Whiting, where preferred shares offer warrants to subscribe at 68p. The shares are 283p.

Club legend Paul Scholes is scared United could disappear into 'the wilderness'
A model of a Neanderthal man on display at the National Museum of Prehistory in Dordogne, France
Dawkins: 'There’s a very interesting reason why a prince could not turn into a frog – it's statistically too improbable'
newsThat's Richard Dawkins on babies with Down Syndrome
Malky Mackay salutes the Cardiff fans after the 3-1 defeat at Liverpool on Sunday
footballFormer Cardiff boss accused of sending homophobic, racist and messages
Rodgers showered praise on Balotelli last week, which led to speculation he could sign the AC Milan front man
Life and Style
life – it's not, says Rachel McKinnon
Arts and Entertainment
Eye of the beholder? 'Concrete lasagne' Preston bus station
architectureWhich monstrosities should be nominated for the Dead Prize?
Arts and Entertainment
Arctic Monkeys headline this year's Reading and Leeds festivals, but there's a whole host of other bands to check out too
music(who aren't Arctic Monkeys)
Lizards, such as Iguanas (pictured), have a unique pattern of tissue growth
Anna Nicole Smith died of an accidental overdose in 2007
Life and Style
food + drink
Arts and Entertainment
'The Great British Bake Off' showcases food at its most sumptuous
tvReview: Bread-making skills of the Bake Off hopefuls put to the test
ebooksAn evocation of the conflict through the eyes of those who lived through it
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Test Lead (C#, Java, HTML, SQL) Kingston Finance

£40000 - £55000 per annum: Harrington Starr: A Global Financial Service Organi...

Access/Teradata Developer, Banking, Bristol £400pd

£375 - £400 per day: Orgtel: Access / Teradata Developer - Banking - Bristol -...

Quantitative Analyst (Financial Services, Graduate, SQL, VBA)

£45000 per annum: Harrington Starr: Quantitative Analyst (Financial Services, ...

Day In a Page

Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

Magic circles: Artist Olafur Eliasson

Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

Greggs gives lesson in crisis management

After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

Matthew McConaughey sings the praises of bumbags

Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
7 best quadcopters and drones

Flying fun: 7 best quadcopters and drones

From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
Joey Barton: ‘I’ve been guilty of getting a bit irate’

Joey Barton: ‘I’ve been guilty of getting a bit irate’

The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
Andy Murray: I quit while I’m ahead too often

Andy Murray: I quit while I’m ahead too often

British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home