Footsie buoyed by water companies

Water companies buoyed the FTSE 100 Index today after regulator Ofwat signalled price rises at the top end of industry expectations.

United Utilities and Severn Trent led the Footsie risers board while shares in a clutch of smaller companies gained by as much as 7%.

The improvement offset falls for oil stocks as the top flight built on yesterday’s 32 points rise by adding another 15.5 points to close at 4751.2.

Elsewhere, Chancellor Gordon Brown’s pre-Budget report failed to unsettle the market while London investors also took a modest opening for the Dow Jones Industrial Average in their stride.

The major talking point proved to be the utilities sector after Ofwat allowed companies to raise water bills by more than it had originally proposed.

United Utilities was the biggest top flight climber, moving 5% higher or 29.5p to 601p. Fellow blue-chip company Severn Trent gained 38.5p to 943p.

Among second-tier utilities, AWG surged 7% or 55p to 799.5p, Northumbrian Water rose 4p to 154p and Yorkshire Water owner Kelda lifted 17p to 560.5p. The proposed 18% rise in prices for the next five years is more than the 13% signalled by the regulator in August.

Oil companies were heading in the opposite direction after the cost of crude fell by the biggest amount in a single session since 2001.

Diminishing fears of a supply crunch over the winter pushed the cost of a barrel of light, sweet crude oil down to 43 US dollars.

Oil giant BP was hardest hit – down 3% or 16.5p to 515.5p – while rival Shell eased 3.25p to 437.75p, Cairn Energy fell 67p to 1457p and gas group BG dropped 8.75p to 353p.

The mood in the rest of the market was more positive with a number of stocks with exposure to high oil prices on the way up. They included British Airways, which gained 8.5p to 234.5p.

Outside the top flight, bank note printer De La Rue was 8.75p higher at 351.75p after announcing a restructuring that included 350 job cuts and the closure of a UK factory responsible for cash counting machines.

And leisure group Rank cheered 2.25p to 306p as it forecast annual results in line with hopes despite sales continuing to be weak at its troubled film and media division.

Tour operator Holidaybreak advanced 3% as it reported a surge in demand for activity holidays in its new financial year. Shares rose 18p to 550p even though underlying profits for the last year were flat.

But Reliance Security dropped 2.5p to 462.5p after it said it had overcome “teething problems” that marred the immediate period after it took over prisoner escort duties in west central Scotland on April 5.

The biggest Footsie risers were United Utilities up 29.5p at 601p, Severn Trend ahead 38.5p at 943p, Legal & General up 4.25p at 112p and British Airways up 8.5p at 234.5p.

The biggest fallers were Cairn Energy down 67p at 1457p, BP off 16.5p at 515.5p, Reed Elsevier down 14p at 473.5p and Enterprise Inns off 17p at 663.5p.