Budget gloom and US interest rates keep Footsie down

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The Independent Online
Gordon Brown's first Budget is weighing heavily on the stock market. The usual deluge of weekend forecasts, ranging from the end of mortgage relief, a glut of "green" taxes and the already well-signalled windfall tax to the strike at institutional tax relief were enough to kill all but the most determined investment interest.

Just to underline stock markets are in for a highly uncertain week, with even the most deeply researched investment decisions likely to be found wanting, the Americans are due to start deliberating on their interest rates today.

And to pile on the agony the US non-farm payroll figures, renowned for creating stock market turmoil, will be published on Thursday. The investment week could be left in limbo and the temptation to postpone decisions heightened with New York closed on Friday for Independence Day.

Footsie struggled to restrain its fall to 35.7 points at 4,604.6. Supporting indices were also weak.

Even the banking fraternity failed to keep up their spirits despite continuing speculation about a bid for National Westminster Bank. Barclays, still to produce a definitive denial of bid interest, fell 33p to 1,192p and Abbey National, another rumoured NatWest partner, weakened 13.5p to 820p. Royal Bank of Scotland, last week touted as a sure-fire target for HSBC, tumbled 22.5p to 559.5p. NatWest lost a modest 3p to 807.5p.

Newly floated Halifax remained on form with the shares, in busy trading, up 11.5p to 773p.

BTR, the struggling conglomerate, rallied 6.5p to 205.5p as some chunky lines went through. The stale bull takeover story went the rounds again although there is a growing conviction that at much above 200p the sum- of-the-parts valuation is unlikely to encourage a break-up bid.

Lonrho, another where parts could be worth more than the whole, fell 4p to 127.5p as merger talks with JCI, the South African group came to nothing.

In the past few weeks the suspicion has grown that the discussions were doomed.

MFI, the furniture retailer, edged forward 2p to 135p ahead of results due today. Around pounds 70m against pounds 58.1m is expected.

Bridon, the wire rope maker, jumped 29.5p to 135.5p, a 12-month high, as engineer FKI, which failed to buy Newman Tonks after a fierce little battle earlier this year, emerged as a possible bidder. The engineer fell 3p to 170p.

Severn Trent, returning pounds 134m to shareholders, gained 13p to 777.5p and ScottishPower added 9p to 391p on Credit Lyonnais Laing support.

Increased profits did little for Scottish & Newcastle, off 4.5p to 646.5p, and Bass remained tentative after Friday's takeover rebuff, falling 2p to 733p.

Merrydown, the alcopops and cider group, lost 12.5p to 55p. Figures due yesterday failed to materialised. They have, it would appear, been postponed until after the Budget, presumably to see if any tax measures are taken against alcopops. The shares touched 140p when the alcoholic soft drink excitement was at its strongest.

BSkyB remained in sad decline with futures activity apparently doing the latest damage. UBS was said to have taken up a batch of September puts. In the cash market the shares fell 13.5p to 440p.

Flextech continued to display relief that last week's BBC and Pearson share sales were out of the way, rising 20.5p to 643p.

Ulster TV, on hopes it will be next in line for a bid, rose 19.5p to 179.5p.

Firm crude prices prompted flares among second-line oils with British Borneo Petroleum Syndicate up 28.5p to 1,417.5p and Hardy Oil & Gas 6p to 334.5p. Shell, in its new slimline form, declined 11.25p to 409.5p.

Rolls-Royce, on fears of forced sales, fell 9.5p to 229.5p. Last week the aero engine group revealed overseas shareholders had topped the 29.5p per cent Government-imposed limit and excess shares were likely to be sold.

Crown Leisure softened 3p to 109.5p. Interim profits were pounds 552,000 against pounds 466,000; the cost of developing an on-line lottery in pubs, clubs and shops will depress year's profits.

JJB Sports held at 492.5p after chairman David Whelan sold 3.5 million shares at 480p through SBC Warburg. The object of the exercise was to finance a new stadium for Wigan Athletic.

Engineering minnow Ferrum slumped 4.75p to 2.5p after an pounds 8,000 profit and a shake up including a pounds 3.1m cash call. Thompson Holdings, vehicle of Richard Thompson, will underwrite the offer.

Taking Stock

rBarr & Wallace Arnold Trust may be edging towards the sale of its holidays side. After receiving a pounds 35m offer from rival Leisureplus, a buyout from Rank, it put the division up for sale to the highest bidder. Most observers believe Leisureplus will emerge as the winning bidder.

B&WAT, where family interests have 25 per cent, will use the cash to develop its motor side; a hand-out to shareholders is, however, likely. The shares were firm at 260.5p.

rKays Food, now focusing on home care services and leisure catering, held at 2.5p. Stockbroker Ellis & Partners described the shares as "speculative but interesting"; it forecasts a loss of pounds 150,000 in the year ended March but profits of pounds 90,000 this year and then pounds 700,000.