Market Report: Cold water poured on Pennon bid talk

Bullish comments from "Super Mario" may have seen the Footsie gush higher yesterday, but not everyone managed to stay afloat. Pennon was one of the nine blue-chip stocks to finish in the red after a bucket of cold water was poured over the utility's takeover hopes.

With Hong Kong billionaire Li Ka-shing's purchase of Northumbrian Water last year leaving just three major independent water companies, many have speculated there could be further bid activity ahead in the sector.

Pennon has been one of the groups suggested as a possible target, but yesterday Credit Suisse played down the likelihood of major takeovers. Saying that while affluent sovereign wealth funds are likely to snap up unlisted companies, analysts from the broker warned they did "not expect appetite for large-scale, hostile buy-outs".

They went on to add that if "a buyout were to take place we would view Severn Trent as the most likely candidate", as the group ticked up 19p to 1,713p. However, Pennon was left 9p weaker at 754.5p, with the scribblers also downgrading their advice on the stock by two notches from "outperform" to "underperform".

In addition, the scribblers cut their advice on United Utilities to "underperform" – although it still advanced 13p to 701.5p – and claimed there was a "murky outlook" for the sector with major regulatory changes likely.

Actions may speak louder than words, but that didn't stop the FTSE 100 shooting up after bullish comments from Mario Draghi regarding the eurozone crisis. It was on course for a fifth losing session in a row before the European Central Bank (ECB) president told a conference in London that the bank would "do whatever it takes to preserve the euro. And believe me, it will be enough".

With his comments being seen by some as a sign the ECB may restart its bond-buying programme, stocks in Europe and the US jumped higher as the benchmark index closed 74.84 points stronger at 5,573.16.

Still, one didn't have to look far for cautious voices, with analysts at Citigroup announcing they now believed the likelihood of a Greek exit from the eurozone within 12 to 18 months was a whopping 90 per cent.

Saying they feel it is most likely to happen in six to nine months, the scribblers added that they expected both Italy and Spain to receive "some form of" formal bailout and warned that the UK could lose its triple-A sovereign debt rating in two to three years.

With plenty of companies releasing results, Rolls-Royce was one of the most impressive. The engineering giant flew up 55.5p to 885p after revealing a 7 per cent jump in its first-half profits following an increase in demand from airlines for fuel-efficient planes, while bosses said the issue with its engines that saw Japan's All Nippon Airways recently ground five planes would not have a significant financial impact.

The gold medal slot was taken by Polymetal International. The Russian gold and silver miner soared 62p higher to 873.5p after HSBC's scribblers kept their "overweight" advice, although the company has still lost 7 per cent in little more than a month.

On the FTSE 250, Drax was attempting a recovery of sorts, although its climb of 27p to 469p was nowhere near enough to recover the 15 per cent which it lost on Wednesday in reaction to the Government's green energy subsidy proposals. This was despite Liberum Capital saying it still believes the power station operator may become a takeover target, suggesting it "could see an approach from a vertically integrated player once there is fuller clarity".

There was no let-up for Lamprell. The oil rig-maker announced its third profits warning in three months while warning it was trying to get some of its banking covenants waived, all of which knocked the small-cap stock back 38.5p to 84.75p, meaning it has shed more than 75 per cent since May.

The Aga is coming to China. Aga Rangemaster, the maker of the middle-classes' favourite oven, revealed it had signed a tie-up with Chinese appliance manufacturer Vatti that will see the two companies distribute each other's goods. Espirito Santo's Sanjay Vidyarthi said the deal was "a further demonstration of the strength and desirability of the Aga product and brand", although this didn't stop the group closing 3.25p lower at 68.25p.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Telesales Executive - OTE £25,000

£13000 - £25000 per annum: Recruitment Genius: Would you like to be part of a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Are you passionate about sale...

Ashdown Group: Graduate Developer (Trainee) - City, London

£25000 per annum + benefits: Ashdown Group: A large financial services company...

Ashdown Group: Marketing Assistant - Financial Services Sector - London

£20400 per annum: Ashdown Group: An established and highly reputable organisat...

Day In a Page

The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future