Appetite for blue chips powers Footsie to record high

MARKET REPORT

Shares, as measured by the blue-chip FT-SE 100 index, stretched to another closing high, with a strong New York opening and the prospect of lower base rates providing much of the momentum.

Even the failure of the much-rumoured big takeover bid to appear failed to dampen the enthusiasm.

For the fourth day running, Footsie powered ahead, with a 25.3-point gain pushing the reading to 3,557.7. Its earlier peak, reached last month, was 3,535.7.

But the current upsurge is very much a blue-chip affair. The supporting FT-SE 250 index is experiencing a far more subdued time. Although it is reaching new highs for the year, gaining 3.7 to 3,952.2 yesterday, it is still just over 200 points below its peak, achieved last year when blue chips were also riding high.

A two-tier market is a development that could create anxiety. Are blue chips running ahead of the game? Will supporting shares eventually catch up? Such questions are occupying many a City mind, with the likelihood the second-liners will at least narrow the gap seemingly the favourite guess.

The current round of profit figures are, of course, important. So far, the string of results have been marginally disappointing. The crunch could come today, with nine Footsie companies, including Glaxo Wellcome, reporting.

Takeover action is also essential. This year has already been dubbed the year of the mega-bid, with cash offers of around pounds 20bn completed or going through.

Institutions, even before the bid bonanza, were cash-rich and now find themselves with an embarrassment of uninvested wealth.

Their problem could become more acute. More bids are likely, particularly for utilities, with many of the predators based overseas and obliged to offer cash.

Today's Ken and Eddie meeting on interest rates could also offer a few clues which, if encouraging, will be highlighted by the market's growing band of bulls.

On the profits front, RTZ pleased with a 33.5 per cent advance producing a 25p gain to 905p. But NFC fell 6p to 160p and Iceland 9p to 184p on disappointment with the company's results.

Barclays rose 13p to 752p as institutions involved in last month's 25 million share buy-back became eligible to pick up stock.

SmithKline Beecham added 12p to 617p, with some wondering if Roche, the Swiss group for long the rumoured suitor for Zeneca, could switch its attention. A much more likely reason for the advance was buy support from Merrill Lynch, the US investment house. Royal Insurance was another attracting bid speculation, up 6p at 345p.

As expected, BSkyB is to become a constituent of the 100 index. Its inclusion is conditional on Pearson selling most of its 9.75 per cent stake, a development the banking and media group is well on the way to completing. BSkyB gained 10p to 361p.

Fisons, struggling to resist the attentions of Rhone-Poulenc Rorer, has also returned to Footsie, together with Lasmo. Caradon, United Biscuits and MEPC have lost their places.

UB rose 3p to 280p as Barclays de Zoete Wedd completed an 8 million-plus trade at around 275p.

ML Laboratories, with a market value of pounds 330m, is joining the supporting 250 index. It is the first time a USM-traded share has enjoyed such exotic status. ML shares, strong on what is regarded as encouraging progress with an Aids drug, rose 15p to 241p.

Matthew Clark, by common consent the unidentified bidder for Taunton Cider, fell 34p to 625p. Taunton fizzed up another 5.5p to 218p.

Kingfisher managed to shrug off Kleinwort Benson sell advice, gaining 1.5p to 459.5p. Signet, the struggling jeweller, held at 15p.

Parcon Managers, an investment group closely related to South African investors Julian Treger and Brian Myerson, has lifted its stake to 14.1 per cent.

The T/M camp, expected to make a statement today, now has more than 18 per cent of Signet and will probably mount a fierce attack on the board at Monday's shareholders meeting. Earlier this year the South Africans unsuccessfully pres-sed for Signet to be broken up.

Scholl, the healthcare group, was little changed at 238p as Messrs Treger and Myerson and friends submitted their formal request for a special shareholders' meeting to oust half the existing board.

Eurotunnel added 3p to 155p on hopes the banks will put together a stop- gap financial package.

TAKING STOCK

o Rentokil, the pest control and healthcare company controlled by a Danish group, Sophus Berendsen, plans its first US road show. Later this month it will hold investment meetings in New York and Boston. Around 3 per cent of its shares are held in the US. The group, which had sales of pounds 63.4m in the US in the first half of this year, launched an ADR issue a year ago. The shares rose 4p to 306p.

o Aminex, the resources group with growing interests in the former Soviet Union, has raised more than pounds 600,000 through a share sale at 60p. The placing was handled by Riada, the Dublin stockbrokers. Aminex, which has increased its proven and possible reserves through a deal in the Komi Republic, is thought to be working on another significant venture. The shares held at 60p.

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