3 Min Read
* FTSE 100 rises for fourth straight session
* Energy Secretary's comments hit utility sector
* Fall in utility shares prevent FTSE from bigger gains
* Rise in Barclays adds most points to FTSE 100
By Sudip Kar-Gupta
LONDON, Feb 10 (Reuters) - Fresh political pressure on Britain's utility industry hit the sector's stocks and limited broader gains for the UK's top equity index on Monday.
The blue-chip FTSE 100 was up by 0.2 percent, or 13.30 points, at 6,584.98 points in late session trading, with the index rising for the fourth consecutive session.
A 1.4 percent rise at Barclays added the most points to the FTSE, as analysts welcomed the bank's plans to step up its cost-cutting programme after it published a snapshot of its headline 2013 results.
However, a decline in major utility stocks prevented the FTSE 100 from making bigger gains.
The utility sector was hit after British Energy Secretary Ed Davey wrote to regulators to say the profit margins of major energy companies' gas supply units were too high.
Davey also said British Gas may have to be broken up and his comments knocked shares in the sector, with British Gas owner Centrica falling 2.1 percent and rival SSE declining by around 1 percent.
Utility stocks are often favoured by investors for their solid dividend yields, but Cavendish Asset Management fund manager Paul Mumford said political pressures on the sector were turning him away from holding those stocks.
"I don't bother to hold them because you're up against all these political headwinds," he said.
"There are other areas of the market where you don't have the same amount of regulatory interference," added Mumford, who said his preferred UK equity sectors include oil and gas, and property.
The FTSE 100 rose 14.4 percent in 2013 to post its best annual gain since 2009, but the index has declined 2.5 percent since the start of 2014 as global equity markets have fallen due to concerns over a slump in emerging markets economies.
Despite this weak start to 2014, many investors with a long-term view expect the FTSE to rise slowly over the course of the year, partly helped by a gradual recovery in the British economy.
Mike Franklin, chief investment strategist at Beaufort Securities, said the index could rise by around 5 percent over the next two weeks to eventually reach the 6,900 point level.
"The pace of returns may be a bit slower this year, but the primary bull market is still intact," he said.