National Grid loses power on downgrade

SHARES in National Grid blew a fuse today, coming within a whisker of their year's low after one of the big US banks downgraded its recommendation.

More than four million shares changed hands, the price falling 9p to 525p after investment bank JP Morgan moved to cut its rating for the shares from buy to market perform. It has also slashed its 12- month target price from 645p to 585p. The price has dropped from a peak of 646p since November under the threat of increased industry regulation. Only yesterday rival Merrill Lynch knocked the shares off its Europe-1 focus list, blaming the company's exposure to the telecoms market through its Energis subsidiary. The value of its stake in Energis, down 10p at 171 1/2p, had been worth about 200p a share when National Grid was first added to the list, but that has since dropped to only 70p.

By contrast, British Energy rose 5p to 237p after US securities house Goldman Sachs moved the shares from market underper-former to market perform while repeating its target price of 240p. The price has fallen almost 30% from its peak in May, following the resignation of chief executive Peter Hollins.

Another lacklustre performance by the Dow overnight, a profits warning from Cap Gemini in Paris and technical problems with the London Stock Exchange's computerised news and prices system Topic left the rest of the market in a spin.

In another thin trading session, the FTSE 100 index fell 52.4 to 5609.5.

Tech stocks were badly mauled following that profits warning from Cap Gemini.

Losses were seen in CMG, down 22 1/2p at 281p, Logica, 65 1/2p at 839 1/2p, and ARM Holdings, 17p to 241 3/4p.

We could hear soon that Cairn Energy has made a major gas find. That was the story doing the rounds in the Square Mile today as the price raced up 8p to 322 1/2p on turnover of 317,000 shares.

J Sainsbury slipped 3 1/2 p to 431p.

Deutsche Bank has repeated its buy recommendation on the shares and has set a target price of 500p following a meeting with chief executive Sir Peter Davis last week. The City has been impressed with Sir Peter's performance since he took over at the helm at Britain's second biggest food retailer.

Shares in Towry Law were suspended at 200p while it put the finishing touches to an agreed offer of 180p a share from Australia's biggest insurer AMP. The terms of the deal value the independent financial advice specialist at 75 million.

Claims Direct retreated 1 1/4 p to 13 1/4 p after it revealed that chairman Tony Sull-man and his deputy have approached the board with an offer for the "no win, no fee" personal liability claims specialist of 10p a share.

Claims Direct came to market last July, valued at almost 200p a share. After hitting a peak of 353 1/2p a couple of months later, the price went into a nosedive after its reputation took a battering in the Press.

Better-than-expected interim results lifted IFTE 7p to 103 1/2p. The group, which specialises in simulated training methods for fighting fires in aircraft and other confined spaces, saw losses reduced from 1.84 million to 1.41 million. Chairman David Williams is confident that the group will make a profit this year for the first time.

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