Bid rumours boost insurers as Footsie struggles

MARKET REPORT
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The Independent Online
Insurance shares are bubbling again following the long-signalled Lloyds TSB strike at Lloyds Abbey Life.

Since the banking giant finally got around to confirming its intention of bidding for full control of its insurance arm, the sector has, in general, resisted the stock market's sudden bout of insecurity which has driven Footsie down, 63.8 points in three days.

Legal & General has been one of the beneficiaries; its shares gained 15p yesterday, making a 29p advance to 785p since Lloyds TSB was stirred into action.

The insurance sector has been on bid alert for years. Rumours have often swirled of overseas predators. What is now Sun Life & Provincial has fallen under French control and Royal Insurance and Sun Alliance, in a blatant defensive merger, got together to create Royal Sun Alliance.

Further corporate activity is widely expected. And L&G looks a prime candidate. In recent times there have been stories of a National Westminster Bank strike and although, as far as market gossip is concerned, L&G seems to have faded as a NatWest target, there is continuing speculation the bank is preparing a spectacular strike.

Prudential Corporation was also caught in the excitement, managing a 9p gain to 450p

The rest of the market was under the interest rate whip. Worries about US rates clouded sentiment with few traders prepared to stick their necks out until the Federal Open Markets Committee had come to a decision. A profit warning from AT&T, the US giant, was another unsettling development.

The market opened on a positive note but with buyers often conspicuous by their absence any exuberance soon evaporated.

Stories that ABN Amro Hoare Govett had suffered heavy losses on its market making activities are having an unsettling influence. Hoare's Peter Meinertzhagen said the group had experienced a difficult third quarter but losses were "a lot less" than the rumoured pounds 20m.

The securities group is thought to have suffered from its exposure to Berisford, Hanson, Iceland and Wickes, the do-it-yourself group which is suspended following accountancy problems.

Hoare has reshuffled its team, with Giles Fitzpatrick, in charge of trading and research, becoming operations chief and Ann Mills given responsibility for global trading.

A US investment road show, said to be backed by Barclays de Zoete Wedd, created a little excitement among media shares with Carlton Communications up 16.5p to 489p.

Granada was also involved with analysts, offering a trading update before its year ends next week. The shares fell 17p to 870.5p; still some analysts were encouraged to lift their forecasts, with NatWest Securities moving up pounds 10m to pounds 460m.

Superstores were firmer with Safeway, helped by talk of another share buy-back, up 6.5p to 331p. Other retailers were subdued by BZW comments and banks were marked down, allegedly on UBS caution. Laura Ashley, with results below expectations, added to the retail gloom. Its shares fell 22p to 193.5p and House of Fraser 7p to 160p. Standard Chartered was the main banking casualty, down 13.5p at 705p.

The Rank Organisation offer for the Tom Cobleigh pubs chain gnawed at the bidder's shares, lowering the price 8.5p to 430.5p. The feeling is that Rank will have to mount bids for other pub groups to support the deal. Cobleigh edged ahead to 236p.

Aegis held at 64.5p. FMR, the US investment group, has picked up 25.9 million shares, 3.12 per cent. The media buyer has been the subject of takeover speculation with WPP rumoured to be interested. A defensive merger with CIA, off 2p at 154.5p, is also mooted.

Stanford Rook, the fledgling drugs group working on a treatment for TB, jumped 32.5p to 395p as Panmure Gordon emerged as stockbrokers to the company.

Frost, the petrol retailer, held at 122p. Merrill Lynch believes the company has been frozen out of the new style petrol merry-go-round and "is less in control of its own destiny". Profits are forecast at pounds 10.5m, down from pounds 15.1m.

Watmoughs, the printer, firmed to 405p as Henderson Crosthwaite said buy and Reunion Mining continued to benefit from the Societe Generale Strauss Turnbull recommendation, gaining 4.5p to 70p.

Radius, the computer group, dipped 10p to 63.5p, despite a 20 per cent interim profit advance to just over pounds 1m. The group, developing and providing computer software, is trading well and has picked up a number of contracts.

TAKING STOCK

John Siddall could be the first stockbroker to join Ofex, the fringe share market run by jobber John Jenkins. The Manchester stockbroker is in merger talks with Chartfield Fund Management, which is already traded on Ofex. Fairisle Investments, the parent company for a group of financial advisers and fund managers, is also involved in the discussions.

The three-way merger would more than double Chartfield's size. The group, run by Michael Flawn Thomas, already embraces the four Waverley unit trusts. Funds under management top pounds 100m. Chartfield's shares held at 65p.

rTilbury Douglas, the builder, could lift profits from pounds 11.8m to pounds 17.5m this year with pounds 22m likely next, believe Merrill Lynch. The shares, at 497.5p, are rated a buy.

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