Is it a good time to buy shares in a sector with a regulatory review looming?
Experts at Morgan Stanley said yes yesterday when they rated water group United Utilities to overweight.
The Ofwat review will set prices for 2015-20 and the regulator is due to confirm the allowed return for utilities groups by 27 January. But Morgan Stanley argued that concerns about the review are already factored into United's share price and the stock offers "superior upside" and will retain an "attractive" dividend. Investors seemed to agree with that argument and the Warrington-based group gushed up 30p to 689p.
The wider market was broadly flat for much of the day but the FTSE 100 slipped 4.44 points to 6815.42 at the close.
The top risers were mining stocks after analysts at Citi declared there is a "mining fightback" and turned bullish on the industry for the "first time in three years". It rated Rio Tinto, BHP Billiton and Glencore Xstrata as key picks, and diggers added more than 4.5 points to the blue-chip index. Antofagasta (up 30p to 819.5p) and BHP Billiton (68.5p to 1,860p) were top of the tree, and Rio Tinto advanced 80.5p to 3,334.5p. Glencore Xstrata ticked up 7.75p to 327.2p.
Traders decided Tullow Oil's plans for Kenya were looking good and it jetted 44.5p to 907.5p.
BSkyB slipped back after a strong share rise earlier in the week amid rumours of renewed bid interest. It fell 24.5p to 845p as Credit Suisse issued its view on what it should do to compete for Premier League rights.
Food to clothing group Associated British Foods fell 71p to 2,625p when strong trading from Primark was offset by worse than expected sugar sales.
On the mid-tier table, the bike-to-car accessories retailer Halfords was up 31.5p at 492.5p after its good Christmas trading update.
Premier Oil slipped 20p to 288p after it said output this year could be flat.
Publisher Bloomsbury said turnover was up 20 per cent year on year and it rose 3.75p rise to 167.25p.
A fall in sales and profit at Games Workshop saw it decline by 176p to 547p.
Oil rig maker Lamprell said its 2013 performance will be ahead of expectations and it gained 13.75p to 154.25p.