Utility sector activity boosts FTSE

Hopes of takeover activity in the British utility sector propelled a string of blue-chip power companies into positive territory on the FTSE today.

Speculation that Russian energy giant Gazprom was mulling over a bid for British Gas owner Centrica lifted sentiment towards power firms – even though traders banked profits on Centrica.

The gains helped the FTSE 100 Index rise 7.8 points to 5755.1 by mid-morning, recovering heavy losses prompted by activity across the Atlantic yesterday.

International Power was among the highest Footsie risers today, up 4p to 277p, and was followed on the way up by National Grid, adding 8.5p to 590p and Scottish Power, up 4p to 583.5p.

However, Centrica lost some of the 11% gains racked up yesterday to stand 1.5p lower at 298.5p.

British Airways also lost ground despite third-quarter profits coming in ahead of expectations, up 8.6% to £164m (€241.5m) after demand for premium seats boosted passenger numbers. Shares weakened 1% or 3.25p to 320.75p as analysts highlighted continued uncertainty over the size of its pensions deficit.

And there was further downbeat reaction to yesterday’s results from oil giant Royal Dutch Shell, which were lower than expected despite the group setting a new profits record for a UK company.

Shell slipped 1% or 22p to 1934p, although rival BP managed to rise 4.5p to 659.5p ahead of its results next week.

Outside the top flight, comments from housebuilder Bellway signalling an upturn in house market confidence helped its shares rise almost 2%, up 20p to 1185p. The group said it saw an improvement in buyer confidence since Christmas, also boosting the shares of rivals including Redrow, up 24.75p to 554.25p and Taylor Woodrow up 10.5p to 405.5p.

This also helped top flight rival Persimmon add more than 2% to its market value, up 30p to 1302p.