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FTSE revives but Centrica slides over gas rigging fears

FTSE revives but Centrica slides over gas rigging fears

16.55: The FTSE 100 turned round to close 19 points or 0.3% higher at 5,786, but Centrica (CNA.L) was one of the day's biggest fallers in response to allegations of gas price fixing.

Centrica, the owner of British Gas, fell nearly 9p or 2.75% to 310.8p despite issuing a statement denying its involvement and saying it had 'very robust governance and compliance policies'.

It said its traders were prohibited from providing price information to reporting agencies and stressed there were more than 50 partcipants in the market, not just energy suppliers.

SSE (SSE.L), down 12p to £13.76, also denied its involvement. 'We are entirely confident that our energy portfolio management team operate in a fair and legitimate way.'

According to a report in the Guardian, the wholesale gas market was subject to price fixing in a similar way to the manipulation of the Libor interest rate by banks.

Seth Freedman, the whistle blower who helped the Guardian in its story, told the BBC that he was assisting the Financial Services Authority in its inquiries into the gas market. He said the City watchdog had been 'amazing' in its response. Energy regulator Ofgem said it was also looking into the claims.

A spokesman for the prime minister said any energy companies found guilty of rigging gas prices should be fined and severely reprimanded.

The energy sector was also clouded by a sharp fall in the share price of E.ON, the German utility, after it said it was reviewing its outlook for next year in light of the European recession.

ITV (ITV.L) was the biggest FTSE 100 riser, leaping 9% or 7.8p to 92.5p after its fourth-quarter trading statement allayed fears over the Christmas advertising season. It said net advertising revenue would be broadly flat for the full year, putting the commercial broadcaster ahead of the market. Numis analysts upgraded the stock to 'buy' from 'add'. 

In the US the Dow Jones inudstrial average rose 35 points or 0.3% to 12,850 with the S&P 500 five points higher at 1,383.

Vodafone profits hit by eurozone woes

Vodafone (VOD.L) shed 5p, or 3%, to 162p as it wrote down the value of its business in Spain and Italy by £5.9 billion and lowered its full-year profit forecasts. The group posted a 1.4% drop in organic service revenues due to the slowdown in southern Europe.

In the first six months business was hit by customers making fewer calls in Southern Europe, slowing emerging market growth and weakening currencies. However, its investment in Verizon Wireless in the US helped revenues, and a £2.4 billion dividend is expected from the group by the end of the year.

Following the results Lawrence Sugarman, analyst at Liberum Capital, said: ‘Earnings before interest and tax forecasts are likely to be cut by 2%.

‘Valuation support should kick in around 160p but expect the shares to test lower levels. We recommend switching into BT as shares are likely to miss out if the market starts to recover from the recent sell-off.’

The blue chip company is a top holding in many defensive UK equity funds and is owned by Philip Matthews in the Jupiter Growth & Income fund; Thomas See in the Schroder Income Maximiser fund; and the Standard Life Investments UK Equity High Alpha fund, managed by Edward Legget.

UK markets got off to a lacklustre start as the FTSE 100 gave up 0.63%, or 40 points, to 5,727 and the Mid-250 index lost 0.42%, or 51 points, to 11,752.

In Europe Greece took centre stage overnight as international lenders gave the country two more years to meet its austerity targets but refused to give more aid to the country.

On the FTSE 100 broadcaster ITV () added 4p, or 4.8%, to 91p as it reported flat net advertising revenues in the first nine months of the year, meaning it is in line to meet full-year forecasts.

Cinema company Cineworld Group (CINE.L) added 5p, or 2%, to 243p as it posted a 1.4% fall in total revenues in its interim statement to the beginning of November. The stock is held by Harry Nimmo, manager of the Standard Life Investments UK Smaller Companies fund and David Taylor in the Chelverton UK Equity Income fund.

Profits at Oxford Instruments (OXI) rose 23.5% in the first half of the year. Shares added 32p, or 2.5%, to £12.90 in early Tuesday trade and the group reported a 25% increase in earnings per share to 20.9p, up from 16.7p.

Oil company Afren (AFR.L) jumped up 3.6p, or 2.6%, to 136p as it reported third-quarter pre-tax profit of $412 million (£260 million), up from $113 million (£71 million) in the same period last year.

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Edward Legget
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