Leading shares are heading for their worst weekly performance since September 2011, with the market falling again on continuing worries about the global economy, another fall in oil price and concerns about Greece.
But water companies are in demand after the latest decisions from regulator Ofwat, which cut the returns they can make and ordered a reduction in bills for customers.
Analyst Angelos Anastasiou at Whitman Howard said the rulings were much in line with expectations, and that water company shares were likely to be supported by takeover speculation. He said:
The companies have two months to accept or reject the final determinations, and we would probably not expect any meaningful response from them until at least after Christmas. Beyond this, the water subsector’s takeover attractions remain over the medium term, and have influenced share prices over the past few months. The precise detail of the final determinatioins will affect this sentiment, but our early thought is that [they] appear to be in line with expectations: relatively tough but probably acceptable.
United Utilities is up 28p at 900p, Severn Trent is 35p better at £19.50 but Pennon is down 8.5p at 865.5p.
Overall the gloomy mood of the week continued, with the FTSE 100 slumping another 85.16 points to 6376.54. So far this week it has lost 5.55%, its biggest percentage fall for more than three years.
The prospect of a new eurozone crisis after Greece brought forward its presidential election continues to unsettle investors, while the downbeat news on the global economy continued with disappointing Chinese industrial production figures.
With the International Energy Agency following Opec earlier in the week and cutting its demand forecasts for oil, Brent crude has fallen another 1.33% to just below $63 a barrel.
So commodity companies are among the main fallers, with Tullow Oil down 15.8p at 357p and Royal Dutch Shell A shares dropping 34p to £20.11. Oil services group Petrofac has fallen 35p to 689p.
via The Guardian
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