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Energy giant Centrica‘s post-results lift was wiped out by analysts warning that customers will continue to desert the British Gas owner as the Government’s price cap intensifies competition.

The UK’s largest energy supplier has been haemorrhaging customers but shareholder fears were soothed on Monday by a sharp slowdown in customer losses to just 110,000 in the first four months of the year.

But Morgan Stanley predicted that tightening regulation could result in more rather than less competition, citing the fierce battle for market share in the betting industry.

A price cap on the standard variable tariffs used by 11m homes across the UK is expected to be in place by this winter.

In a downgrade to “underweight”, Morgan Stanley predicted that cost-cutting can only offset the pinch from shedding customers for so long, while earnings will deteriorate gradually from 2019. Predictions of a continuing customer exodus at Centrica sent shares sliding 7.5p to 140.9p, a 5.5pc plunge.

Elsewhere, paper and packaging giant Smurfit Kappa tumbled 158p to £29.50, its sharpest fall in two years, after US rival International Paper pulled its takeover interest.

Stagecoach shares took a very brief 5.8pc plunge before recovering to gain 1.4p to 154.9p after it revealed that its East Coast rail franchise would be taken back under government control.

Homeserve leapt 70.5p to 828.5p after UBS analysts upgraded the house repairs company to “buy”, arguing that its international expansion will exceed investors’ expectations.

Oil prices were knocked off their highest level since 2014 after the International Energy Agency warned that the recent price surge to just under $80 per barrel will dampen global demand for crude.

The IEA predicted that it would be “extraordinary” if a jump in prices was not followed by a dip in demand, dragging Brent crude down as much as 1.1pc to below $78 per barrel.

Meanwhile, Italian stocks and bonds tumbled after policy proposals leaked from the country’s populist coalition government in waiting spooked investors.

The plans hinted Five Star and League would ask the European Central Bank to write off €250bn (£218bn) of debt. Although the plan was later denied by the insurgents, hints of a hard-line approach knocked investor confidence in Italy.

The FTSE MIB, Milan’s blue-chip index, slid 2.3pc, its sharpest fall since the election, while Italy’s 10-year bond yield spiked 16.2 basis points to its highest level since February.

Rallying mining stocks pushed the FTSE 100 to within sight of its record high with share price surges from Paddy Power Betfair and Micro Focus helping the index close 20.30 points higher at 7,743.28.

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