Market Report: The reliable but dull water companies are far from compelling

A negative broker report on water companies yesterday left Severn Trent as one of the FTSE 100's leakiest members. JP Morgan reported fears of closer regulatory scrutiny of the sector, with Ofwat expected to take a tough stance in the current price negotiations.

With the prospect of any M&A activity diminishing, the reliable but dull water companies have begun the year as a far from compelling story, the broker concluded. The market agreed and Severn Trent's shares shrank 37p to 1,667p.

The banks were much more effervescent, with most of the main high- street outfits bubbling up yesterday ahead of the publication of the Bank of England and European Central Bank interest rate decisions later this week.

Banks may also have been boosted by the US Senate vote overnight approving Janet Yellen as the new chief of the Federal Reserve.

Lloyds showed the most fizz, climbing 2.4p to 82.51p, while HSBC was up 15.8p to 675.8p. Royal Bank of Scotland was not far behind, climbing 6.1p to 350.4p. On the back of the banks, the blue-chip index ended in positive territory, edging up 24.72 at 6,755.45. That left it less than 85 points away from the 52-week high of 6,840.27 it achieved last May.

Meanwhile Marks & Spencer partially recovered from its Monday wobble to climb 0.8p to 441.1p. That suggested traders are still undecided whether the Christmas sales figures, due to be published on Thursday, will contain good news or not. In other retail news, the homewares specialist Dunelm fell 36.5p to 942.5p after a 2.9 per cent rise in second-quarter like-for-like sales.

Enterprise Inns was one of the biggest winners, up 6.6p to 157.2p, while the technology company Pace sped up 12.4p to close the session at 332.7p.

Among the big fallers, the silver producer Fresnillo had another 30p wiped off its value to leave the shares at 705.5p. That followed its Monday slide of 36p.

Other fallers included the precision engineer Renishaw, down 70p to 2,045p. Last week it revealed it was looking at alternative ways to fill its £41.7m pension deficit.

Microchip designer Imagination Technologies fell 4.6p to 175p.