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British Gas operator Centrica was one of today's biggest casualties among the top 100 companies, falling 17½p to 234¾p as brokers set about placing the rump of its recent £2.2 billion rights issue, worth almost £279 million.
About 91% of the issue was taken up by existing shareholders but it was left to brokers Credit Suisse and UBS to find a home for the balance of the 121.1 million shares. They set up a bookbuilding exercise with indicative prices ranging from 225p to 235p a share. But such was the level of demand that the rump was many times oversubscribed, and the shares eventually went for 230p each.
Centrica raised the extra cash by way of a three-for-eight rights at 160p in order to finance the purchase of its 25% stake in nuclear power generator British Energy, which earlier this year was bought by French power generator Electricité de France.
Between them, the two companies will undertake finance, construction and management of the UK's new generation of nuclear-power stations.
The sell-off in Centrica spilled over into Drax, Europe's biggest coal-burning power generator, which saw its price drop 25½p to 515p after some bearish comments from Merrill Lynch.
Elsewhere, shares within a narrow range for much of the day. The FTSE 100 index rose just 4.94 points to 4285.29 in exceptionally thin trading conditions that saw fewer than 900 million shares change hands by late afternoon. Wall Street made a nervous start this afternoon, the Dow losing 57.5 points to 8572.18 following another dip in industrial production.
Back in London, financials were quick to shrug off any ill-effects from the latest scandal to rock Wall Street. It is alleged that hedge fund operator Bernard Madoff swindled $50 billion (£33.4 billion) from high-profile clients, including HSBC, down 12¼p at 720¾p, and Spain's Banco Santander. The news has rocked the hedge-fund industry worldwide.
The UK's biggest hedge fund operator, Man Group, rallied from an opening fall to trade 8½p better at 254¼p despite claims it may be exposed to potential losses of £239 million from the Madoff collapse. Royal Bank of Scotland, which is estimated to have a potential liability of £400 million, firmed 0.7p to 56.8p.
Cazenove has downgraded Lloyds TSB, 2.8p cheaper at 127.1p, and HBOS, 4.1p better at 71.6p, from in-line to underperform in the wake of Friday's trading update from the latter. The broker was alarmed at the speed with which loan losses have accelerated, reducing both book value and capital.
It has slashed the loss a share for this year at HBOS from 4p to 64p and for next year from 20p to 38p. Losses are also forecast for the combined group in 2009 and 2010. For the current year earnings of 10.8p a share have been reduced to a loss of 4.1p.
Oil stocks were marked higher in the hope that planned Opec productions cuts will drive up the price of crude. Cairn Energy rose 46p to 1871p, BG Group put on 33½p to 983½p and Eurasian Natural Resources advanced 18¼p to 318¼p.
Bid target Imperial Energy fell 45p to 980p. The mutter from the gutter is that the Russian oil explorer's third-biggest shareholder, Schroder Investment Management with eight million shares or almost 8% of the company, has decided to accept the highly priced offer of 1250p a share from India's ONGC. The deal values Imperial at £1.3 billion compared with its current stock market value of a £1 billion.
When ONGC first made its offer in August, oil was changing hands at $128 a barrel, but is now worth less than $50. ONGC was last week refused an extension to its offer, which is due to close on 30 December, by the Takeover Panel. ONGC must receive 90% acceptances, otherwise it can walk away from the deal.
Hunting Energy rose 47½p to 458½p after completing the sale of its Canadian subsidiary Gibson Energy to Riverstone Holdings. Hunting is now looking around for acquisitions. Blue Oar continues to rate the shares a buy.
