Premier Farnell charges ahead as it plugs in to US recovery

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The Independent Online

Premier Farnell, the distributor of a vast array of electrical equipment and electronic components, saw its shares pushed forward yesterday on optimism that it will soon be able to raise prices in the recovering US market.

A bellweather for the global economy, Premier Farnell's shares have already risen strongly, but word is that the company is going round with a broader smile on its face than for several years. Management were seen popping in to see the equity sales team at CSFB on Wednesday night, and the Swiss-owned broker was one of several recommending the shares yesterday.

Apparently, Premier Farnell told CSFB that pricing power would increase now the volume of sales in the US has picked up. That might soon mean an end to three years of declining revenues at the group. The CSFB team also came away with the view that trading since the start of December has been every bit as strong as when shareholders last heard officially from the company.

All these trends should benefit Electrocomponents, one of Premier Farnell's London-listed rivals, too. But investors appeared to be switching from the former to the latter yesterday. Electrocomponents shares were off 5p at 349.5p, while Premier Farnell rose 3.5p to 258.5p.

It was one of relatively few stocks to buck the downward trend imposed on the UK market by Wall Street's overnight fall. The Federal Reserve's barely perceptible change of emphasis on interest rate policy ­ which suggested the cost of money might be going up sooner than previously thought ­ had given investors the willies and prompted a bout of profit-taking.

This was particularly acute in the technology sectors, where investors have more profits to take. Yesterday's worst fallers came from the software sector, with Sage, which sells accounting packages to small business, getting the FTSE 100 wooden spoon. It was off 8.5p at 196.5p. The worst mid-cap performer, Dimension Data, was 4.5p weaker at 40.75p.

Reuters slid 13p to 312p after selling a big slice of its stake in Tibco, a Nasdaq-listed software house, raising $504m (£278m). Although Reuters was able to offload more shares than expected, analysts grumbled that the price it got was a little on the soft side.

Other out-of-favour shares from what used to be called the New Economy included LogicaCMG, off 14.75p at 290.25p; Spirent, down 6.25p at 74p; and Filtronic, 25p weaker at 451p. Autonomy, the data sorting software house, fell 10.75p to 287p after its annual results proved slightly disappointing.

The FTSE techMARK 100, set up in 1999 to measure New Economy shares, was off 23.02 at 1,088.4.

There was more frenetic trading in Jarvis, with the dramatic sell-off of the previous two days giving way to, on balance, more buying yesterday. The stock snapped back 14p to 138.5p as investors thought, variously, that things were not as bad as all that at the engineering contractor, or that things were so bad that it is only a matter of time before a break-up bid emerges.

A few new brokers' circulars raised interest. InterContinental Hotels saw its shares rise 6.5p to 536.5p after Morgan Stanley abandoned its bearish stance. The stock has underperformed its sector by 20 per cent since last August and an improvement in the group's credit quality should allow it to start an £800m share buy-back programme, Morgan Stanley believes.

Unilever shares were up a ha'penny at 525.5p on a broker upgrade from the US. And several investment houses cooled their enthusiasm for Stanley Leisure after the casino group's rise, fuelled by bid speculation, earlier this week. Its shares fell 2p to 458p. Wembley, which has received a 750p-a-share bid, fell back to below that price in early trading but bounced to end level at 755p ­ where buyers continue to bet that MGM Mirage is about to face a rival for Wembley's hand.

Nord Anglia, the education and training group, fell back 5p to 245p having been buoyed by buying from JO Hambro, which said it had raised its stake the previous day. Shares in RM, the software-for-schools group, held steady at 145p after appointing Mike Tomlinson, the former head of the schools inspectorate Ofsted, to its board. And while Findel, the school stationery wholesaler, was being rumoured to have a bullish trading update coming soon, its shares were 1.75p lower at 329.5p.

There were upgrades for Gyrus, the keyhole surgery equipment group, after a strong trading update banished some of the worries raised by profit warnings last year. Its shares were 4p better at 193.5p. And CustomVis was up a penny at 78.5p on excitement over its new laser eye surgery equipment.

London Clubs International, the gaming group, won a 2.5p rise to 101p amid gossip that it is close to a vital refinancing of its debts. And renewed bid speculation drove shares in Ashtead, the little plant hire group, up 3p to 25p.

There was some interesting buying of IWP International shares. The Irish cosmetics company rejected a 31p-a-share bid from its former finance director last autumn, and there is speculation his backers may be back for another go. The shares ticked up tuppence to 24p.

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