After early mark-ups, electricities were hit by a wave of selling with, it was claimed, one securities house leading the charge.
By the close, double-figure falls extended throughout the sector with East Midland down 28p to 571p; London 21p to 581p and South Wales 21p at 643p. The sharp losses came after a period of outperformance.
The letter, sent to the 13 regional companies, is said to have made chilling reading. It shocked the electricity groups which were already fretting about new controls.
Apparently, it outlined Mr Littlechild's thoughts ahead of a review of the companies' distribution operations he intends to conduct later this year.
He is expected to announce a new price formula that is certain to cut distribution returns which account for 80 per cent of profits.
Water shares, which have also been eroded by regulatory worries, turned in a firmer display, largely on the feeling they were oversold. Switching from electricities was apparent.
The stock market ended the account on a confident note with US interest spurring many blue chips. The FT-SE 100 index closed 32.5 points higher at 3,133.7. Over the account it managed to gain 12.9 points.
It was significant that the usual end-account influences were less pronounced than in the past, although bear covering clearly occurred.
The market could already be adjusting to the summertime launch of rolling settlement. There are only five accounts left before the new payment system comes into force, ending a settlement traditional that stretches back more than 200 years.
Some private client stockbrokers are apprehensive about the rolling system, worrying about the extra costs they will suffer and their clients' ability to adjust.
The market continued to respond to Thursday's dramatic swoop by Lloyds Bank on the Cheltenham & Gloucester Building Society and growing signs of an upturn in corporate activity.
As if to keep the bandwagon rolling, Inchcape emerged as the bidder for Hogg, the insurance broker. Hogg shares gained 23p to 257p, but Inchcape gave up 9p to 552p.
HSBC, which alerted Hogg to the lurking takeover dangers by building a 6.1 per cent stake through its insurance arm, rose 10p to 733p.
It has taken profits, selling to Inchcape at 257.5p a share including a dividend entitlement. HSBC has made a profit of more than 100p a share.
The corporate uplift and New York's overnight strength more than compensated for the almost complete evaporation of lower interest rate hopes.
A strong performance by government stocks, mirroring overseas markets, also helped. Gilts were up by as much as pounds 11 2 .
Lloyds made further progress, up 12p at 597p, but Abbey National fell 14.5p to 432p as analysts continued to reduce profit estimates because of the threatened increase in competition for mortgages.
BT enjoyed a rumoured Cazenove upgrading. The shares rose 8.5p to 391p and the partly- paid 7.5p to 272p. BET, the business services group, lost 2p to 126p as UBS was said to have lowered this year's profit forecast by pounds 10m to pounds 105m.
Presentations helped TI Group, expounding the merits of its Dowty offshoot, 7p higher to 425p, and BICC, which has completed the rounds in Scotland, 12p to 454p.
Lasmo remained in the takeover frame. In busy trading the shares gained 2p to 147p and the nil-paid rights 1p to 42p. The oil sector was firm as crude prices strengthened, largely on the shut- down of two Nigerian fields. British Petroleum rose 9p to 385.5p and Shell 14p to 725p.
Berisford International, famed for its spectacular takeover of the Magnet bathroom business, improved 9p to 244p as the market awaited the rumoured US acquisition.
Imperial Chemical Industries, first-quarter figures on Thursday, improved 24.5p to 829p. NatWest Securities expects pounds 95m, up from pounds 63m last time.
Bridgend, the distribution and leisure group, held at 24p as its biggest shareholder, an organisation called the Co-operation Retirement Benefit Fund, stretched its interest to 28.01 per cent.
Builder Alfred McAlpine gained 9p to 262p. It has been given planning permission for a 3,300-home development on a 1,000-acre site in Cambridgeshire. Tarmac, figures on Tuesday, gained 7p to 185p. The group is expected to produce pounds 52.5m against pounds 12.8m.
HC Slingsby, a narrowly traded ladder maker, soared 60p to 330p following sharp profit and dividend increases.
DC Cook, the USM-traded car dealer, edged forward 1p to 39p. It has been firm as the outlook for the industry has improved. Last year, it returned to the fast lane, achieving a sharp profits improvement. Further progress will be made this year. Sales are running 40 per cent ahead, which could put the group on the road for sales of at least 20,000 vehicles this year.
Amberley, a building preservation group, held at 50p as the Liverpool-based stockbroker Neilson Cobbold forecast that profits would climb from pounds 400,000 to pounds 1.45m this year and said the shares were a buy. It believes they should be trading up to 20 per cent higher. The group has been revamped by Bob Healy and Brian Meddings, who arrived a year ago.
The FT-SE 100 index rose 32.5. points to 3,133.7 and the FT-SE 250 index improved 7 to 3,789.5. Turnover was 816.2 million shares with 36.132 bargains. The next account ends on 13 May with settlement on 23 May.
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