BUSINESS LIVE: Japanese shares recover; Water companies fined £168m; Travis Perkins profits fall

Three of Britain’s largest water companies face a combined fine of £168 million under Ofwat proposals after the companies were found to have failed to properly manage their wastewater treatment plants.

Thames Water, Yorkshire Water and Northumbrian Water will no longer be able to recoup money from higher customer prices, according to Ofwat, following the regulator’s “largest ever investigation”.

David Black, CEO of Ofwat, said:

‘Ofwat has exposed a series of failings by Thames Water, Yorkshire Water and Northumbrian Water in the way they managed their sewerage systems, resulting in excessive leaks due to flooding.

‘Our research has shown that they routinely discharge sewage into our rivers and seas, rather than ensuring that this only happens in exceptional circumstances, as required by law.

‘The size of the fines we plan to impose is a sign of the seriousness of the failings and our determination to take action and ensure water companies do more to deliver cleaner rivers and seas.

“These companies must act quickly to put things right and meet their obligations to protect customers and the environment. They must also transform the way they care for the environment and focus on doing better in the future.”

The boss of Serica Energy has warned that Labour’s policies on North Sea oil production could lead to huge job losses and ultimately be ‘worse for the environment’.

David Latin has criticised the government’s plans to abolish the investment tax credit for oil producers, which allows them to offset taxes against money that is reinvested.

This comes after Labour last week confirmed a rise in the energy profits levy by 3% to 38%, effective from 1 November.

Japanese shares rose sharply in early trading, recouping most of the previous day’s double losses as fears of a U.S. recession gripped global stock markets.

The Nikkei’s rally, after its biggest one-day drop since the Black Monday sell-off of 1987, came after the yen retraced its gains, signaling that the carnage in yen-financed global carry trades was also easing.

The index was up 8 percent at 0530 GMT, after falling 12.4 percent on Monday. The index was last up 2,623.1 points, after having risen more than 3,000 points earlier to surpass the biggest intraday points gain ever.

The broader Topix rose 7.5 percent to 2,394.33.

Investors were rattled by last week’s plunge in global stock markets, the risks of a U.S. recession and worries that investments funded by a cheap yen would be unwound, leading to a sell-off in Japanese stocks on Monday.

Traders indicated they now appear to be rethinking the severity of their initial reaction and are buying back shares after the drop.