Market Report: Friday close

AN unexpected Parliamentary investigation into tied inns wiped millions of pounds off the value of tenanted pub companies today as investors deserted the sector.

Enterprise Inns, Britain's biggest pub owner, was down 16p at 578p, while number-two landlord Punch Taverns tumbled 27to 503p. The Trade and Industry Select Committee today said it will examine whether pub tenants get raw deals.

Punch, which hoped it had put down a threatened tenants' revolt last year, and the other landlords, have until 2 June to present their case.

Investors dived into the water sector as the utilities unveiled their business plans for the next five years.

All water companies are pushing for significant customer price rises to fund upgrades of critical pipes and plants. While the plans will need to be approved by industry regulator Ofwat, the market was pleased that most of the costs will be passed on to the consumer.

United Utilities, which will spend £3.2bn between 2005 and 2010, pushing average household bills from £255 this year to £356 by 2009, was among the FTSE 100's best performers, up 12 1/2p at 561p.

Kelda climbed 7 1/4p to 484 1/4p as it outlined proposals for Yorkshire Water to spend £1.7bn. Severn Trent, up 13 1/2p at 811p, predicted a £57 rise in the average annual household bill.

AWG, owner of Anglian Water, bubbled up 23 1/2p to 598 1/2p and Pennon put on 9p to 698 1/2p. Northumbrian Water rose 4 1/2p 124 1/4p as it said it would raise prices by 28% over the five-year period.

Investors may have absorbed the implications of yesterday's quarter-point interest rate rise but the FTSE 100 was down 17.80 at 4498.40.

As the City switched its attention to oil, questions over the long-term direction of crude prices countered the effect of recent rises.

Shell fell 3p to 402p while BP rose 3/4p at 500 1/2p. Aim-listed Sterling Energy was off 0.25p to 14.875p after declaring full-year profits of £1.8m and enthusing about six potential new wells in the Gulf of Mexico.

Specialist broker Oriel Securities believes crude prices will fall, the only question being when and how far. It has changed recommendations on three stocks, reducing Tullow, down 2 1/2p to 101 1/2p, to hold, raising Premier Oil, up 2 1/2p at 528 1/2p, to buy, and adding Venture, for which it acts as broker, to its buy list.

Smith & Nephew, up 8 1/4p at 534 1/4p, received a boost as Deutsche Bank upped its target to 650p from 560p following yesterday's better-than-expected first-quarter results.

Merrill Lynch also likes the stock, pointing out its lowly rating compared with US competitors, which makes it look not just cheap but also attractive to potential predators.

Supermarkets operator J Sainsbury is having a horrible week and it looks like things will just get worse. The shares were down 5p to 273 1/2p.

A research note from JP Morgan, entitled Goodbye Profit, Hello Pain and predicting a further profit warning, was receiving a wide airing.

Rival Tesco was down 3 1/2p at 248 1/4p but that will not be enough to ease the pain for Sainsbury's new chief executive Justin King.

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