US Edition British Gas owner Centrica missed out on yesterday's rally in the wider market as some investors worried about the prospect of it carrying out two large deals simultaneously.
Centrica has been in talks with France's EdF to buy a 25pc stake in British Energy for about £3.1bn and on Wednesday announced it is considering a £1bn-plus offer for North Sea gas producer Venture Production, up 21 to 755p.
Yesterday, salesmen from Credit Suisse, which has been advising Centrica on its British Energy transaction, pointed out to clients that it is still "restricted" on Centrica.
Some market practitioners thought the fact the broker is restricted implied it is still pressing ahead with its purchase of its stake in British Energy. Credit Suisse is not believed to be advising Centrica on the acquisition of Venture as the broker is still able to publish notes on the Aberdeen-based gas company. Shares in Centrica fell 10¾ to 236¼p.
Despite the worries, there were a few analysts that took a positive view on both deals, arguing that Centrica's move on Venture could provide it with a better negotiating position when comes to cutting a deal with EdF on British Energy.
Peter Atherton, an analyst at Citigroup, wrote: "Far from precluding the mooted British Energy deal, we believe that Centrica has the ability to do both deals. The relatively attractive terms of the Venture deal can be used by Centrica as a lever to improve the terms of its non-binding memorandum of understanding with EdF on British Energy.
"Whilst the transaction price for the 25pc stake in British Energy is unlikely to be negotiable, Centrica is looking to improve the terms of the deal in its entirety, which could include the sale of other assets, such as SPE."
Cash-strapped private equity investor 3i, which has a stake in Venture, spent a rare day on the leaderboard as analysts pointed out it is likely to be a major beneficiary of any deal with Centrica. Ian Scouller, of Oriel Securities, wrote: "We calculate 3i Group's total investment in Venture is worth £136m."
In the wider market, some shares were volatile ahead of today's triple-witching day when a number of futures and option contracts have to be settled. News that the US Federal Reserve bank plans to intervene in the Treasury market stuck a rocket under the FTSE 100, which jumped by as much as 107.65 points during intra-day trading. However, by the close, the blue-chip index had pared much of its gains to close up just 11.94 points at 3816.93.
David Jones, of IG Index, said: "Early trading saw the FTSE get quite a boost, playing catch-up with the strong gains seen by US markets after the Federal Reserve's surprise bond-buying strategy announcement. The lack of follow through by US shares today though has weighed on UK equities in the afternoon."
Life assurers peppered the blue-chip leaderboard after Prudential, up 33 to 285½p, unveiled a better-than-expected 17pc rise in full-year profit. The departure of chief executive Mark Tucker and the appointment of current financial officer Tidjane Thiam as the new boss of the insurance giant was warmly received by the market.
Joe Heraty, a broker at Merrill Lynch, wrote in a note: "The new CEO did a great job on the call, which likely provided further reassurance that the choice of successor is correct. The presentation was very detailed with a lot of very good new disclosure. There was nothing worrying in the presentation."
Elsewhere in the sector, Legal & General jumped 6.9 to 38.1pc and Aviva gained 21 to 218¾p.
Banks were also in demand with Barclays leading the sector higher. Shares in the bank put on 16½ to 112½p amid mounting speculation the group may be edging closer to selling its iShares division.
Lloyds Banking Group was another standout performer, gaining 6.8 to 54.4p. However, Credit Suisse analysts advised clients to sell into the rally and gave the company a 40p price target.
Mining companies bounced after base metal prices rose for the first time in several days. Copper and aluminium were both up around 2pc during yesterday's session. As a result, Antofagasta perked up 44 to 541½p and Xstrata gained 52 to 433p.
Companies with defensive qualities were heavily sold off as investors' appetite for risk returned. Shire, for example, lost 47p to 819½p and AstraZeneca fell 118p to £22.55. British American Tobacco was also off 64p to £15.61.
Among the second-liners, beleaguered property company Brixton jumped 5 – almost 30pc –to 22p. Its rise came after the company announced it had sold two buildings at its Kingsland Business Park in Basingstoke to Oxoid, its tenant, for £6.9m. The price is slightly above the December 2008 valuation of the properties. Brixton's shares were also given a boost by HSBC, which upgraded the company from "underweight" to "overweight".
Other property companies fared well yesterday. In the FTSE 100, Land Securities rose 45 to 426½p while Land Securities nil-paid shares jumped 49 to 157p. Back in the FTSE 250, Segro put on 13 to 133p and Derwent London perked up 56½ to 712½p.
Inchcape rose 14¼ to 65p after it unveiled plans to raise £232m via a heavily discounted rights issue.
However, Yell lost ¾ to 12p. Dealers have suggested in the past that Axa, one of the company's largest institutional investors, has been trying to offload its entire holding in the company.
Bookmaker William Hill also had a good day after Liberum published a positive note on the company after a meeting with management, who pointed trading remains "resilient". The shares put on 13½ to 235½p.