By Sarah Turner
London-listed utilities climbed on Monday, outperforming the
broader market, after bid speculation helped boost shares of
Northumbrian Water.
Both water and electric-utility shares were higher in the top
index, with Severn Trent shares up 3.7%, United Utilities up 3.5%,
Scottish and Southern Energy shares up 1.4%, National Grid shares
up 1.7% and International Power shares up 1.3%.
The gains for the sector followed a weekend report in the Sunday
Times newspaper that Northumbrian Water , up 9.8% at 284 pence per
share outside the top index, could be in line for a
325-pence-per-share bid from the Ontario Teachers pension fund.
The firm, which already holds over a quarter of Northumbrian
Water, is considering a bid valuing the company at 1.7 billion
pounds ($2.7 billion), according to the report.
"If confirmed, [a bid] will establish a higher trading range for
the other water stocks," said analysts at Evolution Securities.
"Based purely on regulated asset valuation multiples, the biggest
beneficiary would be Severn Trent, followed by United Utilities,"
the analysts said.
Overall, the U.K. FTSE 100 index traded up 0.2%, or 8.52 points,
at 5,197.10. Other European shares were under a bit more pressure,
while U.S. stock futures were pointing to a brighter start on Wall
Street.
On the economic front, the CIPS/Markit purchasing managers'
index for Britain's manufacturing sector rose to 56.7 in January
from an upwardly revised 54.6 in December, its highest level since
October 1994. Economists had forecast the index to come in at
54.0.
Still, shares of Schroders fell 1.5%, weighing on the top index,
after the U.K.-based asset management firm was downgraded on Monday
to neutral from outperform at Credit Suisse.
"We believe that moderating flows will cap any further positive
earnings revisions for Schroders this year," the broker said.
British Airways shares rose 3.3%.
The European Commission is studying an offer made by the
oneworld airline alliance to end the commission's antitrust probe
into their cooperation.
British Airways, American Airlines and Iberia have offered some
commitments relating to "passenger transport on certain long-haul
routes," the commission said.
Before deciding whether the offer is strong enough to appease
the commission's concerns, it is sending the airlines' proposal to
a number of key market players for feedback, the commission
said.
Back outside the top index, shares of Premier Foods rose 2.9%
after it said that David Kappler will step down as chairman later
in the year once a successor has been identified.
"Following the successful completion of the acquisitions and
integration of the Campbell's and RHM businesses and the recent
financial restructuring, the group is now in a strong position and
well placed for the future," said Kappler.