Utilities drag on FTSE 100 after Thames Water receives rescue bid

London’s top stock market index retreated on Friday, with utilities dragging on the index after reports that embattled Thames Water could be brought under French leadership in a £5 billion rescue bid.

The FTSE 100 moved 40.77 points lower, or 0.49%, to close at 8,308.61.

Severn Trent and United Utilities were among the day’s biggest fallers, helping offset gains for retailers B&M and JD Sports.

Investment firm Covalis Capital said it had made an offer to buy Thames Water, in a plan which could see the utility giant broken up into smaller businesses.

Covalis’s bid involves bringing in Suez, which runs major water services in France, to help it run Thames Water in an advisory role.

Meanwhile, in France, the Cac 40 jumped 1.31% after a stronger day of trading for the country’s top share index.

On Thursday evening, President Emmanuel Macron said he expects to appoint a new prime minister within days after the resignation of Michel Barnier.

Mr Macron came out fighting after a historic confidence vote at the National Assembly left France without a functioning government.

In Frankfurt, the Dax rose 0.13% at the end of the day.

In New York, the S&P 500 was up about 0.25%, and Dow Jones down about 0.1% by the time European markets closed.

The pound was down around 0.1% against the US dollar, at 1.275, and up 0.1% against the euro, at 1.206.

In other company news, shares in fashion chain Quiz dived by more than 40% after it warned it could need urgent funding in the coming months after poor sales.

Bosses said they were reviewing the retailer’s financing options and working with advisers in a bid to secure more funds.

Investors reacted by saying that, without a sharp improvement in performance, it will need extra cash in the first three months of next year. Shares in Quiz closed 43.2% lower on Friday.

Direct Line said it plans to back a takeover move by rival insurance firm Aviva.

Aviva made a sweetened approach after seeing a £3.3 billion takeover bid rejected last month for having “significantly undervalued” the company.

The firms said they had reached an initial agreement over a cash-and-shares deal valuing Direct Line at £3.6 billion. Shares in Direct Line rose 5.6% at close.

The biggest risers on the FTSE 100 were B&M European, up 9.4p to 361.5p, JD Sports, up 2.25p to 104.65p, Rentokil, up 7p to 408.7p, Intermediate Capital, up 36p to 2,206p, and Rightmove, up 10p to 675.2p.

The biggest fallers were Frasers, down 24p to 638p, United Utilities, down 38.5p to 1,090.5p, Severn Trent, down 86p to 2,656p, Spirax, down 220p to 7,275p, and Endeavour Mining, down 37p to 1,494p.