Bizarre stories emerge as Footsie continues to drift

MARKET REPORT

As Footsie continued its lacklustre drift the stock market had to resort to bizarre stories to generate interest.

A cash call by a German bank was enough to get one circulating - a bid for a British financial group. National Westminster Bank, or at least part of it, was identified as the likely target.

The German bank is Commerzbank and its intended victim was said to be NatWest's troubled securities arm. Although few professed to believe the story it did allow NatWest shares to buck a falling market, gaining 11.5p to 824p.

The bank has had a difficult year with poor profits and high-profile problems at its securities side. It has held what it called "exploratory" merger talks with two groups, thought to be Abbey National and Prudential Corporation.

The struggling bank has, however, denied it plans to sell its securities business, where it is undertaking a revamping exercise.

Commerzbank is thought to be keen to develop its London operation, which includes fund manager Jupiter Tyndall. It is raising around pounds 700m through a rights issue and has said the cash is earmarked for its investment banking side. The German bank does not have a significant London securities operation, an area which has attracted its rivals, Deutsche and Dresdner.

Footsie fell a further 45.3 points to 4,905.2, making an 89 fall this week. A raft of largely encouraging company results failed to make any overall impression. The FTSE 250 index fell back but the FTSE SmallCaps index provided a flicker of encouragement, gaining 1.6 to 2,281.2.

The Footsie changes were as expected. Norwich Union, Billiton, Woolwich, Sun Life & Provincial (up 8.5p to 420p) and Williams were promoted, replacing Tate & Lyle, Hanson, Imperial Tobacco, Mercury Asset Management and Burmah Castrol.

Drug shares were under the weather with Glaxo Wellcome off 36p to 1,249p and SmithKline Beecham 19p to 530p. Worries about US drug profits created the anxiety and Glaxo also had to contend with unexpected delays over the switch of its Beconase allergy drug from prescription to over-the- counter sales.

Biocompatibles International continued to demonstrate the market's reluctance to take prisoners, crashing another 182.5p to 550p on the failure of its link with Johnson & Johnson to materialise. But Shield Diagnostic rose 35p to 642.5p, highest since April, and Drew Scientific put on 6p to 140p on hopes of an encouraging presentation with tomorrow's interim results.

Croda International, the chemical group, rose 10.5p to 368.5p with Dresdner Kleinwort Benson producing what it called a "strong" buy note; Cadbury Schweppes fell 5.5p to 588p, reflecting negative comments from Societe Generale Strauss Turnbull.

TI, the engineer, edged forward 2.5p to 610.5p with Panmure Gordon describing it as a "premium growth stock".

Psion, the hand-held computer maker, hardened 17p to 419.5p after disclosing it had licensed its EPOC32 operating system to Philips, which intends to use it for a range of data and messaging products.

Airtours, the holidays group, shaded 5p to 1,162.5p on whispers that its bigger rival Thomson was planning a major push. Limelight, the bathrooms to kitchens group, fell 3p to 64.5p; the shares were floated at 175p in November. Interim figures today are expected to be poor and there is talk of a capital injection by founder Stephen Boler and a rights issue.

Tring International, the scene of boardroom strife, fell 1p to 11p after the budget music concern said a bid may appear but not at "a significant premium" to the market price.

JKX Oil & Gas rose 7p to 52p as the Ukrainian state oil company seemed to undermine the agreed bid from Ramco Energy. The Ukrainians acquired a near 11 per cent JKX stake at 52p, some 6p above the Ramco offer. It is unclear whether the counter-move is an attempt to get a higher price or is aimed at preventing Ramco getting full control.

Hanover International, the hotel chain, edged forward 5p to 140p on talk of a Jarvis Hotels strike, and Fitch hardened to 47p as Sir Terence Conran lifted his stake in the design group to 25.79 per cent.

London & Metropolitan, a loss-making property group, came in for a speculative run, rising 2.75p to 7.5p, highest since June. The company has made losses of more than pounds 10m over the past three years. Interim figures are due. next month.

La Senza, the lingerie chain which came to market last year at 150p, fell a further 7p to 31.5p.

Taking Stock

rBritton, the packaging group developed by two former merchant bankers, could soon be a takeover target. There is market talk that an offer of around 120p is being prepared with API said to be the interested party. Britton was once an acquisitive group. Then a shock warning that its interim figures, due later this month, would be disappointing devastated its shares. The price has rallied to 71p from the 51p hit on the warning; last year it was 155.5p.

rEnnex International rose 3.5p to 33.25p, a high. The excitement stems from hopes that the company will exercise its option to acquire 95 per cent of a zinc deposit in Kazakstan. Results of the exploration work Ennex has carried out are thought to be highly encouraging.