Market Report: Labour's confusion is a windfall for utilities stocks

Utilities provided the excitement as Footsie climbed above 4,300 points. Buy signals from the Schroders investment house and Labour's sudden display of confusion over the scope of the threatened windfall tax produced determined buying with United Utilities leading the way, up 26.5p to 670p.

Schroders was thought to be telling clients water shares could experience a 20 per cent upside with UU identified as its preferred investment.

Uncertainty over the extent of Labour's much heralded tax and, indeed, doubts about its privatisation policy spread the buying throughout the former nationalised groups.

Much of the interest appeared to come from private investors. Said Marshall Whiting at Societe Generale Strauss Turnbull:

"Most of the fund managers have made an investment decision on the utilities and are sticking with it."

In the past few weeks former nationalised groups have benefited from a dramatic change in the stock market's estimates of the impact of a Labour government. Panmure Gordon, UBS and Credit Lyonnais Laing have played down the damage of a windfall tax and the prospect of greater regulatory interference if Mr Blair makes it to No 10.

There is a feeling any changes will have little relevance to dividend growth and some even believe they could prove beneficial.

The outbreak of interest in utilities is the first time the election campaign has provided any significant excitement in the market. Generally it has remained indifferent since John Major started the dash to polling day.

In the past two campaigns the privatised groups have had volatile times and the market has also been much more tense. The extent of the Labour lead in the opinion polls has blunted the election shenanigans. But if the Labour advantage continues to decline and the party remains split on the windfall tax and privatisation then shares could wake up to the election with prices responding to the sounds of political gunfire.

The main utilities made progress with the leading water companies higher and the generators in fine form.

Others where the windfall tax hovers moved ahead; BT, with help from SocGen and SBC Warburg, rose 9p to 442.5p; British Airways 11p to 656.5p and Railtrack 10p to 429.5p.

Footsie ended 20.9 points higher at 4,313.2 with a hesitant New York opening shrugged aside.

Among other blue chips Mercury Asset Management put on 19.5p to 1,274p as Dresdner Kleinwort Benson switched its advice to buy.

Drugs had a rather more subdued time although Glaxo Wellcome rose 20p to 1,108.5p on encouraging trials of its Lamivudine drug in hepatitis B treatment. Biocompatibles International rose 82.5p to 1,375p on US clearance for its Proclear replacement contact lens.

Analysts' meetings left Granada unchanged at 905.5p; British Steel's slide continued with Morgan Stanley and Salomon Brothers adding to the negative sentiment. The shares fell 1.5p to 148.5p. Unilever rose 25.5p to 1,559p on Warburg support. FKI, the engineer, was little changed at 186.5p despite a UBS buy signal.

Tate & Lyle, the sweetener group, rose 8p to 444p on suggestions it could attract a takeover approach; results are due soon.

Verity was back in demand, up 4.5p to 51.75p. Its wafer-thin sound system has now been taken up by Samsung, the Korean giant. Verity has already linked with Japanese giant NEC. Its shares were 9.75p in July.

Tracker Network's return to profits drove the shares 40p ahead to 575p and Betacom moved to a new 12 month high, up 4p to 70p, on speculation about Alan Sugar's plans for his third string quoted company.

Wiggins, the property group, held at 10p as MAMs revealed it had built a 3.41 per cent shareholding; South Country Homes climbed 4p to 30.25p on vague talk of bid action.

JN Nichols, the soft group famed for Vimto, was 9p higher at 195.5p on rumoured interest. Bass, the brewing giant controlling the Britvic soft drinks enterprise, was put forward as a likely buyer. Wedderburn, the property group which has evolved as an oil trader following an acquisition, shaded 1.5p to 28.5p. It is felt it has another oil bid in its sights.

Relyon, the bed maker also involved in closed circuit TV, moved 3p higher to 353.5p. Stockbroker Granville Davies believes the shares are undervalued. It forecasts profits will hit pounds 8.5m this year, against pounds 7m, and then stretch to pounds 9.4m. With pounds 9.3m in the bank the group could be set for takeover expansion.

REX/Eye Candy
A photo of Charles Belk being detained by police on Friday 22 August
Alexis Sanchez celebrates after scoring his first goal for Arsenal in the Champions League qualifier against Besiktas
sportChilean's first goal for the club secures place in draw for Champions League group stages
Arts and Entertainment
Amis: 'The racial situation in the US is as bad as it’s been since the Civil War'
booksAuthor says he might come back across Atlantic after all
ebooksAn evocation of the conflict through the eyes of those who lived through it
Life and Style
Google Doodle celebrates the 200th birthday of Irish writer Sheridan Le Fanu
Arts and Entertainment
Vinyl demand: a factory making the old-style discs
musicManufacturers are struggling to keep up with the resurgence in vinyl
In Eternal Sunshine of the Spotless Mind Jim Carrey and Kate Winslett medically erase each other from their memories
scienceTechnique successfully used to ‘reverse’ bad memories in rodents could be used on trauma victims
Arts and Entertainment
Singer Pixie Lott will take part in Strictly Come Dancing 2014, the BBC has confirmed
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

C# Developer (C#, ASP.NET Developer, SQL, MVC, WPF, Real-Time F

£40000 - £48000 per annum + benefits+bonus+package: Harrington Starr: C# Devel...

C# Swift Payment Developer (C#, ASP.NET, .NET, MVC, Authorize.N

£45000 - £60000 per annum + benefits+bonus+package: Harrington Starr: C# Swift...

DevOps Engineer - Linux, Shell, Bash, Solaris, UNIX, Salt-Stack

Negotiable: Harrington Starr: A fast growing Financial Services organisation b...

Trade Desk FIX Analyst - (FIX, SQL, Equities, Support)

£50000 - £60000 per annum + excellent benefits: Harrington Starr: An award-win...

Day In a Page

Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone
Amazon is buying Twitch for £600m - but why do people want to watch others playing Xbox?

What is the appeal of Twitch?

Amazon is buying the video-game-themed online streaming site for £600m - but why do people want to watch others playing Xbox?
Tip-tapping typewriters, ripe pongs and slides in the office: Bosses are inventing surprising ways of making us work harder

How bosses are making us work harder

As it is revealed that one newspaper office pumps out the sound of typewriters to increase productivity, Gillian Orr explores the other devices designed to motivate staff
Manufacturers are struggling to keep up with the resurgence in vinyl records

Hard pressed: Resurgence in vinyl records

As the resurgence in vinyl records continues, manufacturers and their outdated machinery are struggling to keep up with the demand
Tony Jordan: 'I turned down the chance to research Charles Dickens for a TV series nine times ... then I found a kindred spirit'

A tale of two writers

Offered the chance to research Charles Dickens for a TV series, Tony Jordan turned it down. Nine times. The man behind EastEnders and Life on Mars didn’t feel right for the job. Finally, he gave in - and found an unexpected kindred spirit
Could a later start to the school day be the most useful educational reform of all?

Should pupils get a lie in?

Doctors want a later start to the school day so that pupils can sleep later. Not because teenagers are lazy, explains Simon Usborne - it's all down to their circadian rhythms
Prepare for Jewish jokes – as Jewish comedians get their own festival

Prepare for Jewish jokes...

... as Jewish comedians get their own festival
SJ Watson: 'I still can't quite believe that Before I Go to Sleep started in my head'

A dream come true for SJ Watson

Watson was working part time in the NHS when his debut novel, Before I Go to Sleep, became a bestseller. Now it's a Hollywood movie, too. Here he recalls the whirlwind journey from children’s ward to A-list film set
10 best cycling bags for commuters

10 best cycling bags for commuters

Gear up for next week’s National Cycle to Work day with one of these practical backpacks and messenger bags
Paul Scholes: Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United

Paul Scholes column

Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United
Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?