Market Report: Political paralysis puts a drag on Drax

Punters in Drax will be forgiven for wishing politicians would just get their act together. The power station operator has been waiting on tenterhooks for the government to make a decision on green energy subsidies, seen as vital to its future plans and, according to some, its takeover potential.

Yesterday, however, it was hit by the news that the announcement – originally due in spring – had been put off for a second time, and is now unlikely to be made until after MPs return in September from their summer recess.

The amount of support for renewable power is important for Drax because it won't commit to investing in plans to generate more energy from eco-friendly biomass until they know the level of subsidies available.

There has also been speculation in the City that Drax could find itself in play as a takeover target once the future is clearer, with British Gas owner Centrica, 4.9p worse off at 321.2p, one name put forward by analysts as a potential suitor.

Yet investors were clearly unwilling to wait, with Drax finishing the session as one of the mid-tier index's worst performers after sliding 32.5p to 540.5p. This was despite Deutsche Bank's James Brand doing his best to put a brave face on it, saying he did not think the postponement "signals a lack of support for biomass" while adding that the market should "see any near-term weakness in the shares as a buying opportunity".

US Fed boss Ben Bernanke's first bit of testimony to Congress disappointed those hoping for hints of QE3 as the FTSE 100 shifted back 33.34 points to 5629.09. Still, optimists may choose to take heart from the fact he still has the second part of his statement to go today, with Capital Spreads' Angus Campbell pointing out he "could just as easily provide some better news for the bulls".

G4S chief executive Nick Buckles' grilling by MPs over the Olympics fiasco was clearly not doing much to soothe the market's fears, as the security services giant reached its lowest for nearly eight months, dropping 14.6p to 240p. Still, there was some good news for Mr Buckles, with fund manager Invesco – G4S's second largest shareholder – saying he should not resign.

Barclays managed to rise for the first time in a week, ticking up 1.3p to 159p after Citigroup kept the bank on its list of favourite stocks. Economists from the broker claimed the UK sector was "one-step removed from the eurozone crisis", although Royal Bank of Scotland, down 3p to 201.5p, was still on their "least-preferred" list because of its exposure to Ireland.

More generally, the number-crunchers were predicting a return to growth for the UK in 2013, but warned that the eurozone would see a "mild recession" both this year and the next. Citi's analysts used this as a justification for reiterating their preference for easyJet – founded by Sir Stelios Haji-Ioannou – saying the budget airline, which crept up 1.5p to 558p, "looks well-placed to benefit from travellers trading down".

CSR was racing away at the top of the FTSE 250. The chip maker was lifted 73.7p to 292p after agreeing to sell its handset business to South Korean tech giant Samsung for $310m (£198m).

Meanwhile, longstanding vague bid speculation around US pharma group BioMarin was being reheated for the umpteenth time, with market gossips once again suggesting blue-chip drug maker AstraZeneca, up 13.5p to 2,953p, as a possible bidder for the rumour mill favourite.

There was some deal activity on Aim where wheel maker Titan Europe jumped 17p to 130p after announcing it had received an approach from shareholder Titan International.

Fellow Aim stock Ncondezi Coal moved down 0.75p to 26p despite reports from India claiming the miner is in talks with Adani Enterprises over the potential sale of a minority stake in its assets.

Elsewhere, investment group Creon Resources powered up 0.23p to 1.22p as traders applauded news that the tiddler had agreed a joint venture with Chinese shipbuilding giant Yangzijiang.

Premier Oil 375.8p (up 14p, 3.87 per cent) Driller spurts higher after getting a push from analysts at Bernstein who decide to raise their price target to 570p from 470p and keep their "outperform" rating.

Salamander Energy 195.4p (up 6.8p, 3.61 per cent) Asia-focused explorer continues its strong start to the week, with its share price now having added more than 9 per cent over the past two trading sessions.

Morgan Crucible 269.2p (down 10.5p, 3.75 per cent) Engineer is knocked back despite JP Morgan Cazenove keeping its "overweight" rating, although the broker does cut its target price to 360p from 390p.

IG Group 450.7p (down 11.8p, 2.55 per cent) Spread-betting company finishes the day in the red after revealing it saw a drop in revenues over the first six weeks of the new financial year.

BSkyB 695p (up 6.5p, 0.94 per cent) Satellite broadcaster climbs as scribblers from Espirito Santo say its Now TV streaming service "seems to tick all boxes, including competition, regulation and consumer demand".

Hammerson 467p (up 2.6p, 0.56 per cent) Anglo-French property company's recent impressive run continues, with its share price now having added more than 14 per cent since June.

National Grid 662p (down 20.5p, 3 per cent) Utility continues to fall in the wake of Ofgem announcing new regulatory proposals on Monday, as Société Gé*érale cuts its price target on the stock to 642p from 673p.

Rio Tinto 2,916.5p (down 69.5p, 2.33 per cent) Heavyweight miner finishes in the red after announcing its production figures, with iron ore sales over the second-quarter slightly less than its output.

Start your day with The Independent, sign up for daily news emails
ebooksA celebration of British elections
  • Get to the point
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

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power