Market report: Wednesday close

THE investigation by the Government into extended warranties appears to be hanging like a cloud over shares of the electrical retailers.

UBS Warburg has downgraded Dixons, the biggest of them, from buy to neutral and cut its 12-month target price by 10p to 140p. Dixons retreated 1/2p to 130p. Market newcomer Kesa Electrical, which was demerged earlier this month from Kingfisher, eased 3p to 203p after Warburg downgraded from buy to neutral while repeating its 220p target price. Kesa started life at 195p.

Warburg argues that last week's announcement by the Competition Commission on revised hypothetical remedies has increased the risk to both companies' earnings. It estimates that extended warranties, operated through Kesa's Comet subsidiary, account for between 20% and 25% of group pre-tax profits. At Dixons, the amount could be more than 40%.

UBS said the commission is looking at two possible options, one covering an increase in information and cancellation rights, and the other preventing completion at point of sale.

Share prices continued to trade in narrow limits with the FTSE 100 gaining 4.2 points to 4141.2 despite Wall Street slipping into the red.

Telecoms equipment supplier Spirent rose 1 3/4p to 36 1/2p as a big buyer mopped up stock ahead of interim results next week. There is talk of a bid from its US rival Agilent.

Cable & Wireless rose 1 1/2p to 113 1/2p following a meeting with Credit Suisse First Boston, which has repeated its outperform rating and 125p target price.

The warm weather is good news for sales of brewer SABMiller, up 5p at 432 1/4p, in Europe. US profits are down but in line with expectations.

Capita, which operates the congestion charge on London's roads, slipped 2 3/4p to 249 1/4p. The support services group has had to be bailed out by Transport for London with an extra £31m of taxpayers' money because of the shortfall in revenue generated by the scheme.

George Wimpey jumped 17 1/2p to 341p after reporting a 42% jump in profits and a 19% rise in the dividend. The company has hinted profits for the year will be at the top end of the range. UBS has pencilled in £349m.

Optimism spilled over into rival Barratt Developments, up 26 3/4p at 484 3/4p, hard on the heels of yesterday's upgrading by Deutsche Bank. It has moved from hold to buy with a target price up from 430p to 530p.

Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed on the site.