Utilities shine but FTSE lacks energy

Scottish & Southern Energy's plans to raise gas bills by 9.4 per cent fuelled gains among blue-chip utility stocks yesterday.

However, progress on the wider FTSE 100 index was held back after news of a meagre 2 per cent rise in US gross domestic product in the third quarter.

The Footsie closed 2.73 points lower at 5,675.16, while the Dow Jones Industrial Average on Wall Street also struggled to make headway in early trading after the growth figures, which were largely in line with expectations but showed little progress on the 1.7 per cent rise seen in the second quarter.

The result is also under scrutiny for confirmation of the Federal Reserve's plans for further monetary stimulus, with hopes it will announce moves at its monthly decision next week.

The dollar remained weak against the pound and euro as expectations mount that the Fed will act, with sterling at $1.60.

Among stocks, the focus was on utility firms after SSE's announcement. Its shares rose 3 per cent, or 38p to 1,153p, while Centrica also benefited with a 10.4p gain to 332.2p.

Insurers joined them on the risers' board as the sector moved towards its quarterly results season on an upbeat note.

Aviva led the charge, after broker Panmure Gordon said yesterday third-quarter figures from insurers should reinforce the recent recovery of the sector, while sentiment has been further lifted by increased hopes that the UK will avoid a double-dip recession.

Aviva, which will post third-quarter figures on Tuesday, rose 5.4p to 398.1p, while Legal & General added 0.1p to 100.4p. Elsewhere in the financial sector, part-nationalised Lloyds Banking Group rose 1p to 68.9p and Royal Bank of Scotland edged 0.1p higher to 44.6p.

British Airways was the leading faller despite posting interim profits ahead of market expectations at 158 million, which also marked its first half-year profit for two years.

The airline said it had taken a further step in its recovery, but shares retreated 10p to 270.7p as investors took profits after a decent run for the stock in recent days.

Outside the top flight, Premier Foods fell a further 2 per cent - down 0.4p to 17.6p - having dropped 4 per cent on Thursday in the wake of a disappointing trading update.

The housebuilding sector was also under pressure in the second tier after Bank of England figures showed September mortgage lending slumped to less than a tenth of the level seen in August, at 112m. A research note cautioning there is unlikely to be any pick-up in the property market until next spring also hit sentiment on the sector.Bellway fell 16p to 534p and Redrow was 3.8p cheaper at 110.5p.

Among the Scottish stocks, Leith-based harbour operator Forth Ports was unchanged at 1,320p following its third-quarter trading update, in which it said trading at its ports was "ahead of expectations".

Shares in Optos, the Dunfermline-based eye scanner manufacturer, came into sharp focus, up 5.7 per cent or 6p at 112p, ahead of next month's full-year results, when the firm is expected to unveil a rise in profits, flagged up in this month's pre-close update.