Drax surges on biomass subsidy news despite uncertain markets

In an uncertain market there were a number of eye catching price movements.

Drax, the power station owner, surged 59p or nearly 9% to 743p after the UK government set its subsidy prices for renewable energy projects. The company is aiming to convert three of its six generating plants to produce energy from biomass rather than coal, and the government confirmed a strike price of £105 per megawatt hour from 2015 for biomass generation. This is in line with a provisional announcement, but there had been some suggestions it could be scaled back. Exane BNP Paribas analyst Iain Turner told Reuters:

There were a few voices in the market saying that they're not going to get what the draft price was, and I think it's just a relief rally that they have got what they are supposed to get.

Meanwhile Sage soared 25.5p to 372.9p after the accounting software specialist reported a 1% rise in profits to £360.5m before a £188m exceptional charge relating to disposals. It also raised its dividend by 6%.

Analysts had been concerned about growing competition for Sage, particularly in the area of cloud computing. But chief executive Guy Berruyer was upbeat about the prospects, highlighting its success with small and medium sized businesses:

We remain confident of achieving our target of 6% organic revenue growth in 2015 and anticipate further progress during the year ahead.

But Standard Chartered slumped 92.5p to 1338.5p after the Asia-focused bank warned profits would be flat on 2013, after difficult market conditions in the second half of the year.

Overall the FTSE 100 finished 22.46 points lower at 6509.97 ahead of Thursday's Bank of England and European Central Bank meetings, the UK autumn statement and Friday's US non-farm payrolls.

Investors continue to be nervous about the US Federal Reserve being to ease back on its $85bn a month bond buying programme, a key support for global markets in recent months. Mixed signals from the US - better than expected jobs figures, strong home sales but a slowdown in service sector growth - saw shares vacillate during the day before recovering from their worst levels. Michael Hewson, chief market analyst at CMC Markets UK, said:

Today's European session has been another disappointment as expectations of a December Santa Rally appear stuck in a snow drift, while this afternoon's surprisingly positive US ADP numbers appeared to increase the odds of a Fed move in December, though a disappointing US services ISM report tempered the effects of the sell-off.

Elsewhere Tesco slipped 1.6p to 340p as it unveiled a continuing decline in UK sales, which fell 1.5% in the 13 weeks to 23 November. In Asia sales fell 5.1% and in Europe the decline was 4%.

A number of companies went ex-dividend, including National Grid, off 15.5p at 748.5p, and Aberdeen Asset Management, 22.3p lower at 461.4p. In addition Aberdeen announced that three executives including chief executive Martin Gilbert had sold nearly 3.5m shares on Monday at around 484p a share.

Lower down the market chemicals group Iofina dipped 1.5p to 161.5p despite a positive note from Investec. Analyst Neill Morton said:

Market commentary from two of Iofina's competitors in Chile confirms recent softness in iodine prices. This has prompted one (Sirocco) to suspend part of its production and delay expansion plans. In our view, this should underpin pricing around current levels. More importantly, it is further evidence of Iofina's significant cost advantage - its cash costs of up to $20 a kilogram are around half those in Chile. We maintain our buy recommendation and 230p target price.