Centrica stands out as FTSE 100 falls 1%

Centrica hit a two-month high on Tuesday, outperforming a lower London market. Speculation that the British Gas owner might be vulnerable to a takeover helped lift the shares 2.3 per cent to 275.3p. Rick Haythornthwaite, Centrica chairman, said at Monday's AGM that the board has plans in place to respond to bids and declined to comment on whether it had received any proposals.

Since hitting a five-year low in the wake of a February profit warning, Centrica has rebounded 17 per cent. Analysts, while dismissive of the bid theory, reckoned the threat may encourage management to boost shareholder returns when it delivers a strategic review at the end of July.

"With the incidence of deals in the energy sector on the rise it is not that surprising that Centrica may been seen as a target," said RBC.

"It has underperformed on the weak commodity environment but remains a company with a strong competitive position in the market generating robust free cash flow.'' However, the broker said "we do not see a takeover as likely in the near term ahead of UK elections", and the strategic review and findings from the Competition and Markets Authority due in June.

A broad pullback for the wider market meant the FTSE 100 lost 73.45 points at 7,030.53, a 1 per cent fall. Leading the blue-chip fallers, St James's Place lost 3.4 per cent to 875.5p even after its first-quarter results matched expectations. Investors pinned the drop on election concerns, though St James management argued that financial advisers would benefit whatever the outcome.

Standard Chartered lost 3.2 per cent to £10.80 after the bank flagged up revenue pressure in its last quarterly numbers before Bill Winters takes over as chief executive.

The domestic banks slipped after Santander UK said improved liquidity was spurring competition and pressuring margins. Lloyds slipped 0.8 per cent to 78p and Barclays drifted 0.9 per cent to 261.4p.

A sell-off among US biotechnology stocks overnight carried across the Atlantic, leading Shire 3.1 per cent lower to £53.95 and sinking AstraZeneca by 3.3 per cent to £45.48.

Trials of Januvia, Merck's competitor to AstraZeneca's Onglyza diabetes treatment, suggested the drug comes with a lower risk of heart failure. Excluding diabetes patients with heart problems from AstraZeneca's sales would trim 2020 earnings by 2 per cent, said Morgan Stanley.

GlaxoSmithKline lost 1.5 per cent to £15.38, having been buoyed on Monday by takeover speculation. Pfizer management said in a post-results conference call that the company remains open to a range of acquisitions, including a tax inversion.

Allied Minds, the US technology incubator, slipped 3 per cent to 677p on worries that departing chairman Mark Pritchard will sell some of his 9.5 per cent stake. Allied, which was floated in June at 190p per share, said with its maiden results that Mr Pritchard would be replaced by former Bristol-Myers Squibb executive Peter Dolan.

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