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Water companies rose as two banks upgraded their ratings within the sector to reflect hopes of a more favorable pricing deal with regulators.
Citi said it expects a series of constructive proposals from watchdog Ofwat on December 19.
JP Morgan Cazenove also expects significant improvements in regulatory allocations, which should drive a re-rating of the UK water sector.
Ruling on bills: Citi said it hopes water companies will receive a boost with a constructive set of proposals from watchdog Ofwat on December 19.
Reflecting their views, analysts at Citi upgraded United Utilities to buy and upgraded Severn Trent to neutral, while keeping Pennon at neutral.
Meanwhile, analysts at JP Morgan upgraded Severn Trent to overweight and upgraded Pennon to overweight. Analysts maintained an overweight rating for United Utilities.
In reaction, on the FTSE 100, Severn Trent gained 3 per cent, or 78 pence, to 2,648 pence, United Utilities added 3.2 per cent, or 32.5 pence, to 1,059.5 pence, and Pennon, which listed on the FTSE 250, was up 3 per cent, or 16p. at 555p.
As investors awaited the outcome of the US presidential election, as well as interest rate decisions from the Bank of England and the Federal Reserve this week, markets were cautious.
The FTSE 100 index fell 0.14 per cent, or 11.85 points, to 8,172.39 and the FTSE 250 lost 0.45 per cent, or 91.25 points, to 20,370.04.
Aerospace maker Melrose gained 5.2 per cent, or 24.6 pence, to 498.8 pence after Citi analysts reiterated a high-conviction buy rating, seeing a valuation of 600 pence to 800 pence per share based on a solid cash flow outlook.
-Hornby Stock Watch
Hornby, Scalextric’s car and model train group, is moving forward at full steam by announcing the sale of a loss-making subsidiary.
LCD Enterprises has been sold to EKD Enterprises for £1.38m.
Hornby, which is financially backed by Frasers Group and counts businessman Mike Ashley as a consultant, said the sale was part of a rationalization of the group’s business.
News of the sale sent Hornby up 2.8%, or 0.5p.
at 18.5p.
Inter-dealer broker TP ICAP led the mid-cap gainers, advancing 7 per cent, or 16 pence, to 243.5 pence, as it reported record third-quarter revenue, which rose 10 per cent after strong performance of its Global Brokerage and Liquidnet businesses.
Workplace provider IWG also posted gains, up 3.1 per cent, or 5p, to 166.1p, as it reported strong expansion in its managed and franchised segment, which achieved a 19 per cent rise. percent in third-quarter revenue, although overall revenue only increased. 2 percent year-on-year.
Among small caps, newspaper wholesaler Smiths News rose 8.4%, or 4.8p, to 61.8p, announcing strong full-year results, with revenue up 1.1 year-on-year % driven by strong sales during Euro 2024 and an additional trading week.
On AIM, Aferian soared 85.2 per cent, or 2.8 pence, to 6.05 pence after the business-to-business video streaming company said it expects to post an increase of around 20 per cent in the income of the second half compared to the first.
The group also expects to report positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the second half.
Bigblu Broadband was another big performer, jumping 47.1 per cent, or 12p, to 37.5p after confirming Australian media speculation that it is in talks with alternative investment manager Salter Brothers, based in Melbourne, on a possible transaction for its subsidiary SkyMesh.
Minerals explorer Kodal Minerals fell 14.1 per cent, or 0.06p, to 0.34p, as it revealed a dispute with Chinese partner Hainan Mining over taxes payable in Mali.
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