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Yesterday's trading: NRG sparks punters into life

By Geoff Foster for MailOnline
Updated: 02:36 EDT, 23 May 2008

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News of New Jersey-based power company NRG Energy's hostile £5.5bn bid for competitor Calpine Corporation flicked a switch in London and sent punters piling into domestic utilities which analysts say are ripe for takeover.

Geoff Foster, Daily Mail

British Energy, the UK's biggest electricity producer, which has already received several takeover proposals, sparkled at 743½p at one stage before closing 14p brighter at 734p. EDF, or Electricite De France, is currently mulling a £6.7bn offer but faces an almost certain referral to the competition authorities should it proceed.

Scottish & Southern Energy, which supplies energy as Southern Electric, SWALEC, Scottish Hydro Electric and Atlantic Electric and Gas, jumped 42p to 1469p. It has often been mentioned in the same breath as Germany's RWE as has International Power, 11¼p dearer at 449¼p. Drax shed 17p to 707p on profit-taking after Wednesday's 49½p gain.

The sector's strength lit up the Footsie for a while, but late profit-taking took its toll. Up 28 points initially, the index drifted to finish 16.5 points off at 6,181.6. A subdued Wall Street remained hamstrung by a record $135 a barrel oil price although JP Morgan relieved some of the gloom about rising inflation by forecasting a significant sell off for crude oil in the fourth-quarter, down to $92 a barrel.

BP eased 3¼p to 646½p and Royal Dutch Shell 'A' 46p to 2198p. Profit-taking ahead of today's AGM left Cairn Energy 143p off at 3538p.

Shares of British Airways experienced another turbulent session, falling below £2 for the first time in almost five years on growing concern about the UK flag carrier's fuel bill after Air France-KLM, the world's biggest airline by revenue, warned that soaring fuel prices will slash operating profits this year. They nosedived to 193¾p before regaining altitude to close 9½p higher at 212¼p after the British AirLine Pilots' Association dropped plans for industrial action. No frills airline EasyJet climbed 17p to 279½p.

Heavy buying ahead of Tuesday's results amid expectations the strong euro would have boosted revenues helped mobile phone giant Vodafone buzz 4.9p higher to 163½p.

Cigarette maker BAT was friendless at 1902p, down 33p, as dealers expressed concern that a sizeable shareholding could soon come on to the market. Swiss group Richemont, which holds 30% of Bats shares, is considering splitting its luxury business off into a separate company, leaving an investment concern holding its Bats stake in partnership-with a company called Remgro. Sellers put the boot into ITV, down a further ¾p to a low of 57.9p, despite the struggling broadcaster crowing that the nail-biting penalty Champions League Final shoot out between Manchester United and Chelsea was watched by 14.6m viewers, a 60% share.

After ratings agency Fitch downgraded Taylor Wimpey's debt ratings on negative watch to reflect the marked fall in its core UK housing market and continued US weakness, the shares eased 3¾p 101p. Dealers also heard that broker ABN Amro was trying to place a line of 5m shares at £1.

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Industrial engineer Bodycote jumped 14½p to 244½p on revived bid hopes. Some say old adversary Sulzer AG of Switzerland could return with another offer.

Online payment group Neteller slipped 1¾p to 62¼p on sporadic bouts of profit-taking. Dealers continue to hear gossip that the board recently rejected a £1 a share bid approach. The company has £25m cash in the bank and is valued at only £74m.

The bullish tenor of chairman Alex Hambro's AGM address helped Judges Capital improve 3p to 121p. The board expects earnings per share for the first half of the year to be double those recorded for the same period in 2007.

Strong preliminary results lifted Telecom Plus 20½p to 331½p. The UK's leading low cost multi-utility supplier reported a 45% leap in pretax profits to £16.8m.

Redhall, the specialist engineering support services group, advanced 9½p to 288½p on hearing its specialist nuclear equipment manufacturing division, Jordan Manufacturing, has been awarded preferred bidder status for a four year contract for Sellafield's Thorp reprocessing facility.

A first-half profits warning dragged waste management recycler Straight down 25p to 82½p. Marketing consultancy group Optisima collapsed 55p to 115p after warning if the economic environment over the last few months continue, earnings for the year to end-December will be 'significantly' below market expectations.

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