SHARES in Glasgow-based engineering company Weir Group plunged 3.6% yesterday after an influential analyst downgraded its stance on the company due to low gas prices.

Weir Group has seen its share price rise more than 160% since the beginning of 2010, in part due to expectations that it will benefit from demand from the growing yet controversial fracking industry in which water, chemicals and sand are blasted into a shaft to crack rock and release gas.

Analyst Glen Liddy said: "Given the low natural gas price in the US and high gas inventories, we expect the perceived increased uncertainty about near-term demand for fracking equipment to weigh on the share price (and increase volatility) given the high valuation multiples that Weir trades on."

However, JP Morgan Cazenove has dropped its recommendation on the company from "overweight" to "neutral". It still expects the company to post double-digit earnings growth over the next two years.

There has been a rise in fracking recently in the US, where oil and gas firms are investing heavily in developing "unconventional" hydrocarbon sources.

However, a price fall could make some potential sites uneconomic.

In response Weir's shares closed at 1884p, down 70p on the day, giving up the gains they had made from mid-December. JPMorgan retains a 2300p price target for the stock.

Mr Liddy added: "We expect the order inflow for the oil & gas division to see a marked slowdown in the near-term. Long-term outlook remains bright."