Shares of Severn Trent Plc and Kelda Group Plc rose after Merrill Lynch & Co raised its recommendations for the stocks.
Analyst Robert Miller-Bakewell raised his rating on Severn Trent, the U.K.'s second-biggest water company, to ``buy'' from ``neutral'' and set a price target of 1,480 pence. No price target had been set previously.
The shares rose 28 pence, or 2 percent to close at 1403 pence in London, their biggest gain in almost three months.
Miller-Bakewell raised his rating on Kelda, the owner of Yorkshire Water Services Ltd., to ``buy'' from ``neutral'' and set a price target of 950 pence. No target had been set.
The shares gained 22 pence, or 2.5 percent, to close at 904 pence in London, their biggest gain in more than two months.
``The market's correction has pulled back valuations and, in our opinion, created attractive entry levels in both Kelda and Severn Trent,'' Miller-Bakewell said in an e-mailed note today.
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