Bid speculation was swirling around Northumbrian Water, with talk that a Canadian pension fund, which owns more than a quarter of the company, was preparing a near £2bn offer.
Any deal with the Ontario Teachers' Pension Plan Board would have to be agreed with the Northumbrian directors under Takeover Panel rules. In February the Canadians were forced to deny reports they were planning a bid, which prevents them from mounting an offer for six months unless they get the company's backing or another predator emerges. Northumbrian refused to comment on "market rumour."
Northumbrian shares closed 10.3p higher at 308p, but some analysts were not convinced the Canadians would gain much from a bid. Lakis Athanasiou of Evolution Securities said:
It is difficult to see the logic, and Northumbrian's share price looks a little toppy. In operational terms the company is well managed so there is not much for them there. If they want more exposure to the industry, they could always buy shares in other companies in the market. On the other hand, having the whole company means it won't be bid away from them.
Other possible predators, if not the Canadians, could include infrastructure funds or sovereign wealth funds such as Abu Dhabi Investment Authority.
Still in the sector, Severn Trent slipped 54p to £12.49 and United Utilities lost 21p to 538.5p as both companies went ex-dividend.
Overall the FTSE 100 finished 20.10 points higher at 5237.92, its sixth successive day of rises. This is the best winning streak since early September 2009, and came despite investor nervousness about Spain's financial situation and poor US housing figures. The EU was forced to deny that, along with the IMF, it planned to implement a €250bn emergency bailout for Spain, while the country also announced it would publish the results of stress tests on its banks and financial institutions.
But analysts at RBS said some form of support for Spain was not out of the question:
In our view there is absolutely no doubt that a backstop facility for Spain will be put in place should stress in the system remain. We remain of the view that the ECB would need to step up its Securities Markets Programme including buying Spanish paper (including private sector paper), but it's possible that the response might also involve other authorities as part of the backstop facility.
As for US housing, new starts fell 10% in May after the ending of a homebuyers' tax credit, which pushed Wall Street slightly lower by the time London closed.
But share volumes were low in the UK, and Joshua Raymond, market strategist at City Index said:
You get the feeling that there are a lot of investors who are simply sitting on the sidelines. Are they watching the World Cup or are they concerned about how financial markets may play out over the rest of the month? My assumption is both.
Banking shares were mixed as the threat of break up and new taxes grew, with Barclays down 1.95p to 304.85p. But Royal Bank of Scotland rose 0.95p to 45.17p as it sold its Pakistan and United Arab Emirates operations.
Elsewhere Shire topped the FTSE 100 risers, up 35p to £14.62 as Deutsche Bank began coverage of the pharmaceutical group with a buy note at £16.50 price target. Deutsche said:
Having navigated the loss of exclusivity on its best-selling drug, Adderall XR, Shire can look forward to a period of strong revenue and earnings growth, based on a re-bound in its ADHD franchise and on rapid growth from its biologics-based human genetic therapies business. The latter should attract a broader swathe of investors to the stock and could help drive forecast upgrades. The company's attractive growth and cash flow outlook should command a premium rating in our view.
Hopes that the Australian government would be prepared for a compromise over its proposed mining supertax pushed Rio Tinto 7.5p higher to £33.39 and BHP Billiton 11p better to £19.30.
Elsewhere Jupiter Fund Management priced its flotation at 165p a share, at the lower end of the suggested 150p-210p range, valuing the business at £755m. In conditional dealings the shares climbed to 190p. Blackrock is the company's largest new shareholder with 5.13%.
Lower down the market Servoca, which supplies teachers, nursing staff and security consultants, was steady at 10p as half year profits rose 10.5% to £950,000. But the company warned that government spending cuts would hit its business so it would not meet full year expectations. It is keen to make acquisitions to reduce its dependency on the public sector, and has identified a number of possible opportunities.
Plastic packaging group RPC added 2p to 243p following strong full year results and upgrades from Panmure Gordon, Collins Stewart and JP Morgan Cazenove.
But Plant Health Care plunged 64p to 110p after it warned on profits as a key customer, Monsanto, cut back its orders for the company's seed treatment product Harpin.
