LONDON (ShareCast) - Utility stocks were making gains on Friday afternoon as they attempted to rebound following their recent falls.

After an impressive rise so far this year, high-yielding utility stocks have been under pressure over the past week. While this could simply be a result of profit-taking, some analysts have suggested that the falls could have been due to dampened demand following the recent rise in government bond yields.

Centrica, which owns British Gas, was among the best performers of the day on the FTSE 100 on Friday, joined closely behind by water groups Severn Trent and United Utilities.

National Grid however was registering slight falls after JPMorgan Cazenove trimmed its target price for the gas and electricity provider from 785p to 735p, owing to expected negative earnings momentum as well as concerns about bond yields.

The broker said that US and UK bond yields have risen sharply in the last month (up 46 basis points and 29 basis point, respectively).

"We believe the increase in bond yields has driven rotation out of the US utilities sector, which has fallen 10.4% month to date. In contrast National Grid’s share price, which has historically been closely correlated to the performance of the US utilities index, has only fallen 3.8% month to date."

With a "full" valuation, JPMorgan thinks that the shares may be weak ihe near term.


Top performing sectors so far today
Gas, Water & Multiutilities 5,991.34 +0.55%
Fixed Line Telecommunications 3,519.95 +0.19%

Bottom performing sectors so far today
Forestry & Paper 9,371.08 -3.55%
Construction & Materials 3,804.93 -2.10%
Life Insurance 6,031.89 -2.07%
Food Producers & Processors 7,424.54 -1.88%
Aerospace and Defence 5,086.94 -1.73%

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