Market Report: Bid talk washes round water giants

As the rain poured down yesterday, traders sloshed about in old takeover bid rumours about water companies, which promptly launched Severn Trent and United Utilities to the top of the FTSE 100.

Severn Trent was targeted by the Canadian-led LongRiver consortium earlier this year but rejected the approach and the Canadian and Kuwaiti investors walked. Regulations mean they can't come back for a while, but that didn't stop hopeful traders speculating that this consortium may be looking at United Utilities. Others thought a completely new player could now be taking a look at the sector. Although only a vague rumour and no new names were mentioned, United surged 15.5p to 703p and took the top spot on the blue chip index and Severn Trent flowed ahead 34p to 1,792p.

Other less fanciful comments from traders reasoned that the water companies were popular yesterday because they offered cautious investors a safe-haven when the rest of the market remained weak.

The FTSE 100 lost 52.69 points to 6,570.17 as investors remained nervous ahead of the ahead of the Federal Open Market Committee statement tonight.

The Government's sale of a 6 per cent stake in Lloyds Banking Group saw the bailed-out bank languishing towards the bottom of the blue chip index, 2.71p worse off at 74.65p. But Aggreko, 69p off at 1,580p, took the wooden spoon after the temporary energy provider was downgraded by analysts at Credit Suisse to underperform. The Swiss bank is concerned about the number of lucrative hire contracts that will soon come to an end for the business.

Rising gold prices benefited precious metal miners, with African-focused Randgold Resources 59p better at 4,545p. But the commodities trader and mining giant Glencore Xstrata fell 7.7p to 334.2p after it was downgraded by UBS.

The engineerer Smiths Group ticked up 3p to 1,376p after an upbeat note from Jefferies ahead of today's full-year results.

Square-eyed scribblers at Liberum Capital said broadcaster ITV is worth a look. Liberum was keen on the potential for retransmission of shows on other channels or in other countries. It said it could be the next "big opportunity" given its success with Downton Abbey and Broadchurch. But ITV has yet to convince investors and it slipped 1.1p to 181p.

Mid-tier metal flow engineer Vesuvius declined 22.6p to 464.2p after Morgan Stanley's analysts decided to downgrade it to underweight. Smartphone chip technology specialist Imagination Technology was a victim of profit taking and dipped 9.4p to 334.6p.

Over on AIM it was the turn of fashion followers at Morgan Stanley to turn negative on online fashion specialist Asos. Morgan Stanley's retail team admitted that it remained a fan of the group and said "nothing has shaken our confidence in the long-term story … we anticipate the company issuing a strong trading update later this week (with sales likely to be up more than 40 per cent year on year)."

But, it is very concerned about its valuation. The shares are up 158 per cent over the last 12 months, Morgan Stanley could not find a way to justify the valuation: "We have tried 10 different ways to justify the current share price but none seems plausible." Other analysts have rated the group a sell before and then had to change this amid red faces as the stock continued to grow. Morgan Stanley's retail experts said: "We are acutely aware of the drawbacks of turning negative on a hyper-growth stock in the middle of a bull market. We have, therefore, looked for ways to justify raising our price target. However none of the 10 approaches we tried stood up to much scrutiny." So the team was forced to downgrade it to underweight. But they raised their target price to 4,000p and Asos slipped 482p to 4,880p.

The gold and platinum producer Pan African Resources shone 1.75p brighter at 15.5p after a strong set of full-year results, with revenues up by 32 per cent.

Software specialist K3 Business Technology Group said that retailers are returning to spending on technology and its final results yesterday pointed to an uplift in sales in the fourth quarter. It was 10p stronger at 139.5p.

Maritime and offshore waste specialist Nature Group reported improved half year sales and profits and advanced 3.5p to 40.5p.

Voices
On the last day of campaigning before the polling booths open, the SNP leader has written to voters in a final attempt to convince them to vote for independence
voicesIs a huge gamble on oil keeping the First Minister up at night?
Life and Style
tech

Apple has been hit by complaints about the 1.1GB download

Arts and Entertainment
Pointless host Alexander Armstrong will voice Danger Mouse on CBBC
tv

Much-loved cartoon character returns - without Sir David Jason

Arts and Entertainment
Liam Neeson said he wouldn't
tv

Liam Neeson's Downton dreams

PROMOTED VIDEO
Arts and Entertainment
Actor and director Zach Braff
tv

News
i100
Arts and Entertainment
Rosalind Buckland, the inspiration for Cider with Rosie died this week
booksBut what is it like to be the person who inspires a classic work of art?
Arts and Entertainment
tv

News
i100
Arts and Entertainment
The former Doctor Who actor is to play a vicar is search of a wife
film

Matt Smith is set to join cast of the Jane Austen classic - with a twist

News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Lionel Messi in action for Barcelona
filmWhat makes the little man tick?
Arts and Entertainment
Meera Syal was a member of the team that created Goodness Gracious Me
tv

Actress to appear in second series of the hugely popular crime drama

Arts and Entertainment
tvReview: An undercooked end (spoiler alert)
Life and Style
i100

Arts and Entertainment
Pharrell dismissed the controversy surrounding
musicThe singer said 'the last thing I want to do is degrade'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Property Underwriter

£70-90,000: Saxton Leigh: Our client a London Market Insurer are seeking a Pro...

Operational Risk Manager - Asset Management

£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week