FRANKFURT (dpa-AFX) - Shares from the utilities sector were among the favorites across Europe on Thursday in a persistently good market environment. In the Dax, RWE continued its upward trend with a plus of 1.1 percent, approaching the 200-day line as a technical hurdle. Since the October low, they have already gained around 22 percent. Eon fared somewhat better than RWE on Thursday with a rise of 1.9 percent. However, the increase since the October low has only amounted to less than nine percent.
RWE and its renewable energy activities benefited from the fact that the price limit for project tenders in the UK is to be raised significantly. This provided a tailwind across Europe on Thursday, as the Stoxx Europe 600 Utilities sector index showed with a rise of 1.1 percent as the leader in the sector ranking. The shares of the British company SSE were also conspicuous, rising by two percent. The investment bank Exane BNP Paribas upgraded the shares to "outperform".
Analyst Deepa Venkateswaran from Bernstein Research pointed out that the price limit for British tenders had been raised after a previous round of auctions for offshore wind projects failed to attract any bidders. This announcement is a step in the right direction and welcome news, he said. "The UK government has recognized the importance of setting the price cap at a level that reflects the current cost and tariff environment," the expert wrote. High costs in the current high interest rate environment have recently been seen as a significant industry problem.
In the UK, there are so-called contracts for difference for renewable energy projects, which are intended to create secure conditions for the investing companies in the sector. The company with the lowest price is awarded the contract and is guaranteed that any difference to the bid price will be compensated in the event of low electricity prices. This limit is now to be increased by two thirds./tih/gl/jha/