Blue chips take a breather but banks stay on the boil

MARKET REPORT

Blue chips, after a six-day winning run which lifted Footsie more than 200 points, paused for breath, although many of the front-running financials continued to make headway.

National Westminster Bank, up 19.5p to an 893.5p peak, was the centre of attention in late trading. Rumours swirled that a bid, allegedly at 1,070p a share, would be announced today by Prudential Corporation, the insurer.

Many were quick to dismiss the speculation as yet another example of a stock market ramp. Such a deal, they said, would make little, if any sense.

Whether or not the Man from the Pru hovers over NatWest, the strength of the story is yet another indication of the market's absolute conviction that takeover fun and games are about to break out in the high-flying financial sector.

NatWest, with a profit warning and the far reaching problems of its investment arm to tolerate, has surprisingly put on a strong market display, even if the shares have been overshadowed by the likes of Barclays and HSBC.

Paradoxically the NatWest investment side helped to keep bank shares on the boil. It told clients its preferred shares were Barclays, HSBC, Lloyds TSB and Standard Chartered.

NatWest Bank was conspicuous by its absence and, as if to rub salt into the omission, rival securities house Lehman Brothers said NatWest was a sell.

Lehman put a target price of 2,500p on HSBC, which had to live with its own investment arm, the old James Capel, eulogising its merits, claiming it was at least among the best of the banking fraternity,

The songs of praise lifted HSBC to yet another peak, up 26.5p to 2,177.5p. Barclays gained 26p to 1,308.5p and Abbey National 12p to 891.5p.

Insurances produced some strong features with General Accident up 41p to 947.5p and Royal and Sun Alliance 17p at 488.5p. Pru was little changed at 614p.

Schroders, 42.5p harder at 1,837.5p, was another financial in demand but Mercury Asset Management remained neglected, off 3p at 1,269.5p.

Footsie ended 15.2 points lower at 4,949. In early trading it hit 4,993. Trading was again often hectic with turnover topping 1.1 billion, the second day running the one billion level was breached.

Overseas buyers were still evident, although there appeared to be some relaxation in US interest and a tendency by a few domestic players to snatch profits.

The supporting FTSE 250 index was firm but the FTSE SmallCap again gave ground.

British Steel was the star Footsie performer. Its share buyback, orchestrated by Cazenove, took nearly 5 per cent of the capital out of circulation at 155p a share, leaving the price up 10.25p at 159.75p.

National Grid went to a 262.5p high, up 5p, on HSBC support and Reed International, up 11.5p to 619p, enjoyed positive comments from Goldman Sachs.

Rolls-Royce continued to fly out of its long dive, climbing 9.5p to 232p. The market sees the abolition of the Government's golden share in BT as a signal it will soon relax the restrictions on foreign ownership of Rolls and British Aerospace shares. Under present regulations foreigners can only hold up to 29.5 per cent of Rolls and BAe, down 3p to 1,337p.

BT, still smarting from the MCI fiasco, fell 5p to 440.5p in more heavy trading. BZW was said to have moved the shares to hold.

Jefferson Smurfit, the packaging and paper group, added 6.5p to 196.5p as the losses by its 46.5 per cent owned US associate heightened the belief that a transatlantic deal was near.

Shield Diagnostic jumped 50p to 570p and Drew Scientific, where there is talk of a rights issue, rose 12p to 117p.

The major drug shares, after recent strength, had a torrid session with Zeneca off 120.5p to 2,144.5p and Glaxo Wellcome 56.5p to 1,343.5p. SmithKline Beecham fell 42.5p to 1,204.5p. SkyePharma declined 12p to 76.5p on drug development delays.

Micro Focus, the computer group, collapsed 142.5p to 1,782.5p on the surprise departure of chief executive Marcel Gumucio.

MFI Furniture gained 6p to 151.5p, largely on the back of the windfall spending spree. Profit forecasts are hardening with pounds 90m top of the range.

Manchester United rose 15p to 685p on hopes of a Far Eastern deal; Martin Edwards, the club's chief executive, sold more shares - 80,000 at 680p.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Loren Hughes: Financial Accountant

£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...

Sheridan Maine: Finance Analyst

Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...

Day In a Page

General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
11 best bedside tables

11 best bedside tables

It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

Italy vs England player ratings

Did Townsend's goal see him beat Kane and Rooney to top marks?
Danny Higginbotham: An underdog's tale of making the most of it

An underdog's tale of making the most of it

Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

Steve Bunce: Inside Boxing

Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat