Utility stocks helped push Britain's top shares higher on Monday, as the UK's near-Arctic conditions boosted demand for energy, but British Airways toiled as the big freeze disrupted airline services. The FTSE 100 closed up 19.86 points, or 0.3 percent, at 5,891.61.
It touched a fresh intra-day year high of 5,913.83 before falling away, although trade was light as the market wound down for the Christmas holiday at the end of the week. "If this winter wonderland continues it's not only good news for Santa, but an early Christmas present for the utility companies too," Jimmy Yates, head of equities at CMC Markets, said. Utility firms Centrica and National Grid were up 1.4 and 2.0 percent respectively, as the freezing temperatures boosted demand for electricity and gas.
The UK's Met Office has warned of more snow and ice in many parts of the country. Oil majors were higher as temperatures in Europe and the US Northeast looked set to remain below freezing this week boosting heating fuel demand.
Oils services firm Petrofac gained 2.5 percent, while temporary power supplier Aggreko added 2.4 percent. The snow and sub-zero temperatures grounded flights across northern Europe on Monday. British Airways fell 1.9 percent as the airline cancelled all short-haul flights out of Heathrow.
Mid cap peer EasyJet was off 1.6 percent. Retailers, which rely heavily on the foot-fall in the lead up to Christmas, were trampled lower, with Next and Marks & Spencer off 0.9 percent and 0.7 percent respectively, and Tesco down 0.8 percent. Next was also hit by a downbeat note from H20 markets, which repeated its "sell" rating. "Our view is that the shares are likely to suffer a continuing downward correction in the run up to the Christmas trading statement on 5 January 2011," said Daniel Harris, head of dealing at H2O Market.
Mid cap Debenhams was 1.6 percent lower, while Dixons Retail dropped 6.2 percent as traders feared the weather would hit sales of its big ticket items, which were expected to pick up ahead of the VAT rise in January. Back on the upside, Diageo rose 1.4 percent as investors bet on stocks perceived as better able to endure harsh economic conditions, and as UniCredit lifted its rating on the drinks company to "buy" from "hold". Positive broker sentiment also buoyed InterContinental Hotels, up 1.2 percent, with Numis Securities upgrading its rating for the stock to "buy" from "add".