While the wider market sank deep into the red, Centrica provided a bright spot as analysts at Barclays Capital awarded the owner of British Gas a “double-upgrade”, saying that the utility company had defied their “formerly bearish expectations and demonstrated that it retains a firm grip on its earnings”.
Raising their recommendation to “overweight” from “underweight”, analysts said: “In recent months it has become clear that Centrica is something of a safe haven: it has demonstrated exceptional pricing power, it operates in a surprisingly supportive political environment, its balance sheet and cash flow remain strong. Whilst it has faced earnings pressures in the first half of 2011, these in our view are transient issues.”
As the broker also upped its earnings-per-share forecasts by an average of 7pc and raised its price target to 370p from 320p, Centrica put on 1.1 to 318½p.
Joining Centrica were precious metal miners, Randgold Resources andFresnillo as investors headed to those other safe havens – gold and silver, with the yellow metal again hitting record highs.
Randgold Resources ticked up 95p to £55.60 while Fresnillo claimed the gold medal, advancing 34p to £16.59. That was mirrored on the second tier where Centamin Egypt put on 5.7 to 141½p and African Barrick Gold climbed 16.9 to 472.3p.
But they failed to drag the market into positive territory as worries about the debt situation in the US and Europe continued to unnerve investors.
The results of the European bank stress tests did little to quell investors’ concerns about the eurozone debt crisis as traders were unimpressed that they did not factor in the impact of a Greek default.
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