Plans to cut the amount of nicotine in cigarettes sucked more air out of tobacco stocks today.

The US Food and Drug Administration unveiled drastic plans on Friday afternoon to reduce nicotine in cigarettes to “non-addictive” levels, which would make it easier to quit.

The news hit London’s two big tobacco companies just before the London Stock Exchange closed for the weekend.

But Imperial Brands, off 129p, or 3.9%, at 3186.5p, and British American Tobacco, down 68.81p, or 1.4%, to 4887p, were stubbed out further as investors scrambled to count the potential cost of the FDA’s decision.

The timing is bad for BAT, which just bought US rival Reynolds in a £38 billion deal and now has 43% exposure to the US, according to Chris Wickham at Whitman Howard. The analyst says Imps generates 23% of its revenues in the US.

Barclays analysts said the FDA’s move was “unhelpful” but suggested the short-term fears had been “overplayed”.

The tobacco sell-off restricted the FTSE 100’s gains at the start of the week despite strong rises from HSBC and mining stocks. The blue-chip index still put on 36.83 points to 7405.20.

Miners took their lead from China, where manufacturing data was disappointing but still showed growth. Anglo American rose 41.6p, or 3.4%, to 1273.6p.

Water companies also flower higher after upgrades from RBC as it suggested investors are wrong to be afraid of Ofwat’s review.

“We believe Ofwat doesn’t have an agenda to dry out investor profits. Instead it attempts to weed out companies whose inefficiencies and profit-taking hurt customer interests; by implication these may even ultimately lead to market consolidation,” analyst Maurice Choy said.

He raised his ratings on both Severn Trent and United Utilities to Outperform, helping the former surge 73.26p, or 3.4%, to 2225.5p and the latter gush 25.13p, or 2.9%, higher to 896.63p.

Rolls-Royce lost altitude ahead of tomorrow’s first-half results amid reports the aircraft engine-maker has warned investors it may not hit its £1 billion free cashflow target by 2020. Shares dropped 33p to 896p.

Trading software firm Fidessa improved 39p, or 1.7%, to 2296p after a better second quarter hoisted its first-half results higher.

On the junior market, energy consultancy Utilitywise plummeted by 21.03p to 38.1p as it warned revenues for the year ended July will be below expectations because of a slump in renewals.

Brave Bison, the viral video tiddler backed by Kelvin MacKenzie, the former editor of The Sun, jumped 0.15p, or 13%, to 1.3p as it trimmed the half-year pre-tax loss to £2.2 million, even as revenues dived to £6 million.

MacKenzie and his son Ashley, the ex-chief executive, failed in their bid to oust the chairman last month.