The rain poured down on the City yesterday, but water shares were on the up amid hopes that utility firms will come to a more profitable agreement with the industry regulator over new licence proposals.
Ofwat had said it wanted to break the link between prices and inflation, and warned that firms which disagreed faced being referred to the Competition Commission. But after the market closed on Tuesday night, the regulator took on what JP Morgan analysts called a "softened" view.
Ofwat said: "The challenges facing the sector means there is a need for new, innovative ways to deliver sustainable water. Flexibility is needed in the licence since it is one of the key tools of regulation so that we, as regulator, can adapt to changing circumstances."
The buzzword "flexibility" was seized on by investors and analysts.
"The softening of Ofwat's stance on a Competition Commission referral reduces the near-term risk of negative newsflow," said the suits at JP Morgan. This "should help reassure the market that UK water regulation remains sensible and proportionate".
RBS Capital Markets' John Musk agreed, and said Ofwat's statement "suggests there may be a middle ground here".
The water firms bubbled up in response. United Utilities gained 12.5p to 673.9p, and Severn Trent put on 22p to 1570.9p. But Pennon, which owns South West Water, was left behind, half a penny cheaper at 608.5p.
Elsewhere, the most surprising news in the Footsie was that it takes more than a coach trip to a warehouse in Enfield to get retail analysts excited. On Tuesday, Tesco packed 80 analysts and investors off to visit its north London dot.com "dark" store, where no shopper treads but goods are packed for online orders.
The supermarket did its best to entice the suits: "Lots of delicious samples," said Seymour Pierce's Kate Calvert; the day was "all washed down with dinner, consisting entirely of Tesco products", Philip Dorgan at Panmure Gordon added.
But the trip itself was received more mutedly. "Getting back on track, but that's all," said Caroline Gulliver at Espirito Santo, with a neutral stance. "Catch-up investments need to be made."
With a sell recommendation, Ms Calvert added: "It is far too early to call the turn, but we were encouraged by the fact that management seemed to be making the right noises."
Tesco's shares fell 1.25p to 317.8p.
Meanwhile, the continued failure of talks to sort out a bailout for Greece was a drag on the Footsie. Nearly 12 hours of talks through the night weren't enough for eurozone ministers, the International Monetary Fund and the European Central Bank to work out a deal. They'll have another go next week, they promised – leaving the Footsie just 3.93 points higher at 5,748.1 points.
It would have been a bit better, but Vodafone went ex-dividend, accounting for 6.9 points of the fall. More was taken out by the mining group Vedanta and supermarket chain Sainsbury also going off dividend.
Still, City types weren't happy. "Mary Magdalene would be comfortable here – it's sepulchral," said the Cantor Index veteran David Buik. "Volumes are desultory, New York is closed for a four-day break, nothing is happening on Greece – it gives investors every chance to do nothing."
The FTSE 100 platinum and chemicals group Johnson Matthey did it best to take the benchmark index lower. The world's biggest catalytic converter supplier warned that lower truck sales would make for a tough second half. The first wasn't stellar: pre-tax profit for Johnson's first six months fell 6 per cent to £191.2m. Shares dropped almost 6 per cent, or 135p, to 2,179.6p.
Elsewhere, the market digested yesterday's news of Xstrata's shareholders backing its proposed £56bn merger with Glencore. The deal was expected, but the resignation of Xstrata's chairman, Sir John Bond, half an hour afterwards wasn't. He quit after investors rejected the £140m of retention bonuses he had sought to tie into the deal. Investors said good riddance: Xstrata shares put on 10.4p to 999.1p.
Darty, the electrical retailer, sold its loss-making Italian operations yesterday, the first major move by its new chairman, former Whitbread boss Alan Parker. Shares put on 5.8p to 49.75p.
Rival landlords Land Securities and British Land were high risers after Morgan Stanley upgraded its ratings on the stocks to "overweight". Land Securities added 6.5p at 783p and British Land gained 9p to 524p.