Market Report: BA snowed in as the cold boosts energy stocks

Much like most of the country, it was the snow that dominated the blue-chip index yesterday. The extreme weather conditions pushed the utility companies up as the nation struggled to stay warm, but British Airways and the retailers were left out in the cold.

With experts forecasting demand for gas reaching an all-time high, National Grid surged 11p to 563p. It was joined near the summit by British Gas-owner Centrica and Scottish & Southern Energy, up 4.7p to 335.3p and 15p to 1,200p respectively.

Following a weekend that saw thousands of angry travellers stranded at airports, British Airways took the index's wooden spoon, dropping 5p to 265.2p. Recently hit by worries of a fresh cabin crew strike, yesterday it was forced to cancel all domestic and short-haul flights departing from Heathrow, and daily losses for the company have been estimated at as much as £10m.

As expected, the retail sector took a knock across the board thanks to the heavy disruption caused to those who were eager to shop during the last weekend before Christmas. Howard Archer, IHS Global Insight's chief UK and European economist, said: "It now looks highly probable that some people may end up buying less... and these sales are not subsequently made up."

Next fell 17p to 1,968p and Marks & Spencer retreated 2.5p to 372.9p, while on the mid-tier index Dixons Retail was forced back 1.51p to 22.84p. HMV suffered even more, with the high street chain – which has already endured a torrid December – losing close to 10 per cent of its share price, dipping 3p to 28.5p.

Despite the weather, the FTSE 100 managed to reach a new high for 2010 after finishing 19.86 points stronger on 5,891.61, beating its previous best by a mere 0.4 points.

Royal Bank of Scotland and Lloyds Banking Group both dropped significantly last week, thanks to worries over Ireland, but yesterday RBS managed to make some of it back, advancing 0.64p to 38.46p. Lloyds was less impressive, edging up 0.37p to 66.87p.

Aggreko, the power generator supplier, added 36p to reach 1,570p, following the announcement that it had won a £37m contract to provide power for the London 2012 Olympics. The company is already a dab hand at major events, having recently worked on the Beijing 2008 Olympics and last summer's World Cup.

Given the wintry conditions, it was perhaps not too surprising that investors were keen on Carnival, the world's largest cruise company. It jumped 37p to 2,801p ahead of today's expected release of its fourth-quarter earnings.

Helping it was HSBC, which initiated coverage on the company alongside its sector rival Royal Caribbean International. The broker was positive on both, but chose Carnival as its top pick thanks to its "diversified fleet and branding, superior returns and lower leverage".

Staying with the holiday theme, InterContinental Hotels booked gains of 15p to close on 1,249p as Numis Securities raised it to "buy", citing the company's "very strong market position in emerging markets".

The biggest mover on the FTSE 250 was Gartmore, following its announcement late on Friday that it was in talks with its rival Henderson regarding a potential takeover. Investors reacted badly after Gartmore revealed that the potential offer being discussed was at a "slight discount" to its price at the end of Friday's session, when it was at 98.75p.

The troubled hedge fund group, which has endured a torrid time since the high-profile Roger Guy left the company at the start of November, lost 9.05p to 95.75p, while Henderson had a slight move upwards of 0.1p to 130.6p.

Elsewhere on the mid-tier index, Execution Noble was rather damning on SuperGroup, which dropped 178p after its interim results last Wednesday and yesterday crept back 27p to 1,334p. "The aggressively negative reaction to the interim results may surprise some, but we think this is the start of a longer term correction," said the broker's analyst Sanjay Vidyarth. "We maintain our view that it is easy to be seduced by high growth rates without taking account of the significant risks inherent in the SuperGroup model."

Among the small-cap companies, the online gambling group 888 was boosted up over 17.5 per cent after it confirmed that it was in takeover discussions with Ladbrokes. The two companies previously spoke about such a move in 2006, but this was abandoned over fears regarding the threat of possible legal action facing 888 in the United States.

Despite Panmure Gordon's analysts warning that "there can be no certainty that these discussions will result in a formal offer being made", 888 rallied 8.75p to 57.75p while Ladbrokes shed 1.5p to 126p.

On the Alternative Investment Market, Xcite Energy shot up 45.5p to 316.36p following the release by the oil exploration and development group of a positive, albeit very brief, well update.