Householders faced with greatly increased electricity bills may be surprised to hear it, but shares in some of Britain’s power generators are not such a safe haven after all.

Banks may be bailed out, but a long recession could hit demand for power from the utilities. Scottish & Southern Energy slid 88p to £12.08 and Drax fell 34½p to 649½p as Martin Brough, of Dresdner Kleinwort, cut his rating on both to “sell”, saying that wholesale UK gas prices, at present 30 per cent above global commodity prices, were set to fall next year as more gas is delivered from Norway and elsewhere, which would show up Drax’s dependence on coal and SSE’s dependence on hydroelectric and wind power.

Mr Brough said that Centrica, off 8½p at 281¼p, which he upgraded to “buy”, could even afford to cut retail prices in 2010 because it would make a fat margin on cheap gas it would be supplying to consumers at high prices. Centrica’s shares could rise by 30 per cent, he said.

National Grid, beset by worries about its plans to raise its spending on the grid by £2 billion over the next four years, fell 55p to 610p.

United Utilities, the electricity generator, fell 47p to 577p, and International Power, which owns Britain’s biggest hydroelectric station, and has sizeable debt, lost 20¼p at 274p. Credit Suisse frets over its exposure to unstable countries such as Pakistan – where it has three plants – and expresses “limited appetite for highly leveraged businesses”.

Aviva threw the credit-crunch focus on to insurers by saying that it had hedged exposure to its equity investments to ensure that big falls in shares are softened. That helped it to rise 24¼p to 434p and most fellow insurers also recovered amid a general bounce in financials. However, Standard Life fell 15p to 241¾p because it is regarded as the most exposed to the UK economy and stocks. It is to give an update on new business this month. Keefe, Bruyette & Woods has said that Standard Life’s “new business is expected to be hit hard by slowing UK economic growth”.

Henderson, the fund manager, fell 16¾p to 74¾p after saying it would miss its profit target because clients were redeeming funds. Standard Life could suffer the same effect as people cash in their investment products.

Early gains by the FTSE 100 were wiped out by nerves on Wall Street ahead of an auction of Lehman’s toxic derivatives. The London index closed down 52.89 at 4,313.8 despite a recovery in mining, bank and oil shares.

Barclays went against the trend, off 36½p at 241¾p, on fears over its exposure to Lehman derivatives and that it was closer than other banks to lining up a dilutive issue of preference shares to existing holders and the Government. HBOS rose 36½p to 153½p on new hope that a rescue by Lloyds TSB, up 1¾p to 211¾p, may still go ahead.

London Stock Exchange fell 44½p to 668p as the rival NYSE Euronext unveiled big cuts in charges for high-frequency traders.

Pearson fell 26p to 543½p after Cazenove said industry data on schoolbook sales in the US suggested a weak August, with sales down 17 per cent.

— New York: Shares on Wall Street extended their losing streak to a seventh session even after the SEC lifted its temporary ban on short-selling. The Dow Jones industrial average closed down 678.91 points at 8,579.19.

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