Thirsty investors take to the waters and here

With the Takeover Panel snuffing out any early hopes of a new Trafalgar House bid for Northern Electric, attention has switched to what has become the poor relations of the utility industry - waters.

Already Northumbrian Water is in the predatory sights of Crdit Lyonnaise Des Eaux and Yamaichi, the Japanese securities house, has raised the possibility of a US assault on Wessex Water, drifting along near its 12-month low.

Waste Management International, the UK arm of a US waste disposal giant, has 19.8 per cent of Wessex, a result of a joint waste services venture. With the French showing an increasing thirst for the water industry there is speculation that Wessex will attract a US strike.

Douglas Falconer, an analyst at Yamaichi, talks about the possibility of "a knock-out bid". He suggests an agreed offer would allow an existing standstill agreement to be bypassed and could deliver Wessex, up 5p to 279p, on a relatively cheap rating. He also indicates that Lyonnaise may not have sole negotiating rights with Northumbrian, putting forward Gnrale Des Eaux as a possible contender.

But Lyonnaise's desire may be stronger. It already has substantial water interests in this country, including North East Water. Its UK water-related operations produced profits of £46.3m in its last financial year.

The feeling there could be a rush of water bids helped the sector, for so long overshadowed by electricities, to make modest headway. But electricities were again depressed with Northern reflecting the fading bid hopes with a 54p fall to 727p. Manweb and Yorkshire were among others to give ground.

The rest of the stock market failed to build on recent strength and the FT-SE 100 index slipped 4.8 points to 3,089.3. In a roller-coaster session early gains were wiped out in the immediate wake of the expiry of the March options. A subsequent rally petered out.

Turnover was again encouraging, although many private client stockbrokers complained they were seeing little of the business. Once again, tax-efficient but low-margin bed-and-breakfast deals made a significant contribution to the day's activity.

More jittery currency trading was blissfully ignored by equities, but Government stocks felt the chilly impact, closing lower.

Tarmac, the building group, was busily traded, gaining 1p to 112p on talk of a German strike. The shares, firm on Thursday, are near their 12-month low.

Fisons, selling most of its research side, jumped 7p to 163p. The latest deal will pull in £202m, the same amount the group is collecting for its scientific instruments sale.

Building shares had a firm session, helped along by the growing confidence interest rates will not be forced higher. A hint of lower German rates provided additional encouragement. There was also talk that a leading building personality was buying shares because he had become convinced the industry was set for happier times. Among shares higher were Barratt Developments, Berkeley, Bryant and Tay Homes. Redrow was also strong, up 6p to 117p. The shares floated at 135p last year

BTR weakened 10p to 321.5p as Hoare Govett moved its recommendation from undervalued to hold. Courtaulds, the chemical group, felt the impact on downgrading, losing 11p to 441p. The group has met analysts this week and it is thought the reduced forecasts stem from higher raw material costs.

Tate & Lyle's celebration of its elevation to the FT-SE 100 index proved short-lived. Thursday's anticipatory gain was almost wiped out as the shares soured 11.5p to 428.5p.

BAA, the airports group, followed its pricing policy success with its dbut on the Australian share market. The shares responded with a 13p gain to 455p. An upbeat trading statement lifted engineer Siebe 16p to 545p.

Asda reached another 12 month high, up 1.25p to 73.25p. There is thought to be US buying after a transatlantic visit.

Takeover speculation returned to haunt Kleinwort Benson, up 24p to 614p. Etam dipped 9p to 196p as takeover hopes faded following the appointment of Stanley Lewis as chairman. He is head of Oceana which has 37.2 per cent of the fashion chain. Manchester United firmed to 125p following its deal with Trafford Park Estates to buy land to expand its Old Trafford Stadium.

Shares in PhoneLink jumped 26p to 202p after the company clinched a deal for BT to use its Tel-Me service. The link could be worth £2.25m to PhoneLink over the opening two years of the agreement. BT will sell Tel-Me - which allows users to access information via their personal computers - through its business channels. The shares have been as high as 440p. BT rose 2p to 376.5p.