Probe sparks 'new Enron' fears

THE spectre of another Enron-style scandal spooked global stock markets after Duke Energy, a major power industry player, admitted federal agencies are investigating its trading activities.

The news sent shares in London, at one time up 111 points, into a sharp reverse as the Dow Jones on Wall Street posted an early slide.

Duke Energy is the latest pillar of corporate America to become embroiled in big questions over ethical misconduct. The company, led by chief executive Rick Priory, said it had received subpoenas from the Commodities Futures Trading Commission and the Houston office of the US Attorney related to a grand jury investigation, which is also handling the criminal investigation into the now-bust Enron.

Authorities are known to be examining the trading activities of energy companies - including Duke - over so-called 'round-trip' or 'wash' trades between firms that may have improperly inflated earnings and possibly contributed to California's energy crisis last summer.

Duke, based in North Carolina-is the 17th-largest US company and one of the biggest international energy trading firms. In addition to a trading floor in central London opened two years ago, its interests in Britain include a share in the gas interconnector with continental Europe.

Its gas trading interests on the Continent, especially in the Netherlands, are believed to be significant. The group's chief financial officer is former BT senior executive Robert Brace.

The news sent the Dow plunging in early trade, with Wall Street sentiment not helped by a report from the University of Michigan showing that consumer confidence dipped sharply over the past two weeks. The stocks average clawed its way back to show a more modest decline by mid-session.

In London, the FTSE 100 gave up its positive territory on initial fears of the fallout from Duke, diving as much as 59 points before coming back to 4223.6, showing a loss of 6.4 points.

Traders remained nervous about any kind of rally in London shares. Mark McCutcheon, head of dealing at Gerrard, said: 'It still feels very fragile. One or two more serious setbacks and we could be in capitulation mode, falling through 4000'.