Energy companies took a tumble today after regulator Ofgem opened an inquiry into the electricity and gas supply markets.
British Gas owner Centrica unveiled profits of more than £2 billion earlier in the session, but news of the investigation caused shares to close 4% lower.
The wider market finished in positive territory, with hopes of more interest rate cuts in the United States causing the FTSE 100 Index to close 38.6 points higher at 5932.2. It had been more than 100 points stronger at one stage.
The energy regulator’s announcement sent a host of sector players down.
Centrica was the leading casualty, off 12.75p at 314p, with rival Scottish & Southern not far behind, losing 31p to 1504p. Generators and distributors were also affected, with nuclear power firm British Energy 14p worse off at 531p and National Grid down 14.5p at 761.5p.
On a brighter note, information provider Reed Elsevier topped the risers board after it announced plans to sell its magazine stable and it posted annual results ahead of market hopes. Shares jumped 43.5p to 627.5p, a gain of 7%.
Mining firms rose, with Anglo American up 96p at 3257p, Xstrata adding 113p to 4060p and metals producer Kazakhmys cheering 34p to 1522p.
Banks were better off with Halifax Bank of Scotland up 12.5p to 659p, Royal Bank of Scotland ahead 10.75p to 374p and Lloyds TSB 8.75p stronger at 436.75p. Lloyds will be the latest bank to report full-year results on Friday.
But Alliance & Leicester shares remained under pressure after its annual results yesterday raised fears about the company’s prospects in 2008. Shares were off another 3%, or 12.5p to 479.5p.
Elsewhere in the top flight, a trading statement from B&Q owner Kingfisher was met with relief after it said full-year results were likely to be in line with expectations. The statement left shares 3.5p higher at 135.5p.
Insurance giant Aviva, which owns Norwich Union, lifted 11p to 579p as a broker note from JP Morgan said a solid set of annual results were expected later this month.
Defence company BAE Systems also saw a hike, ahead 6p at 478p, after reporting underlying profits up 22% at £1.48 billion for 2007.
Another riser was pay-TV giant British Sky Broadcasting, which announced it had appealed the Government’s decision to force it to reduce its controversial 17.9% stake in ITV. Shares in the satellite business were up 13p to 595p.
Scottish & Newcastle shares were down 3% after SABMiller quashed rumours that it was planning a counter-bid for the UK brewer. Shares in Foster’s brewer S&N rose on the speculation yesterday, but were down 20.5p to 787p today.
The four biggest Footsie risers were Reed Elsevier, up 43.5p to 627.5p, Royal & Sun Alliance ahead 4.3p to 133.9p, Old Mutual up 3.8p to 128.5p and Yell Group up 8.25p to 279.25p.
The four biggest fallers were Centrica, down 12.75p to 314p, British Airways off 10p to 272p, British Energy down 14p to 531p and Scottish & Newcastle off 20.5p at 479.5p.