Electricity sector barely keeps the flame burning

MARKET REPORT

Electricity shares managed - just - to keep the takeover flame burning. With weekend speculation of dawn raids turning out to be wide of the mark the privatised utilities were still able to play the power game.

Much of the action centred on National Power and PowerGen. Southern Co, the US group, had seemed to be on the verge of mounting an assault on NP.

But, possibly, wiser counsel prevailed and the Americans stood back to consider the implication of the Government's refusal to allow NP to buy Southern Electric.

The stock market's view is that Southern will, with just the required minimum amount of hesitation, sacrifice its first UK venture, Southern Western Electricity.

It has already said it is prepared to sell a substantial minority stake; now the feeling is it might well be inclined to release SWE completely to allow it to put together a powerful NP challenge.

NP rose 5p to 571p and PG 5p to 467p with the market taking the view that even if the expected takeovers failed to go through there was a high possibility of special dividend payments and share buy backs to try to keep shareholders sweet.

The strength of the generators contrasted with a lacklustre performance by the rest of the market with most shares limping along. The FT-SE 100 index drifted off 23.6 points to 3,809.2 and even the supporting FT-SE 250 index, which has been in rampant form, relapsed 14.8 to 4,553.8.

Drug shares staged a few runs with Glaxo Wellcome up 11.5p to 792.5 p on hopes of US clearance for its new anaesthetic and British Biotech rallied 100p to 2,875p. Smith & Nephew added 3p to 187.5p on its human skin replacement developments.

Financials also attracted attention with Perpetual, the fund manager, climbing 35p to a closing peak of 4,473p after 2,500p. Further consolidation in the financial community is likely to occur in the next few months and Perpetual, despite its aloof, stand-alone stance, could be caught up in any corporate activity.

Stockbroker BWD gained 7p to 118p and ED & F Man, the commodity group, 8p to 168p.

Hillsdown, the food group, tumbled 9p to 179p following the Independent's story about hygiene problems at its GG Baxter meat subsidiary.

Manchester Utd was on a roll, anticipating the Premiership title even before Newcastle Utd went into action last night. The shares surged 37p to 379p, a new peak.

But the club's adventures on the football pitch are only part of the shares' strength. The market is convinced the club has some intriguing television deals up its sleeve and details could start to emerge in the next few months. One possibility, which has not been rejected, is the club could, within a season or two, have its own television channel with supporters dialling in for matches, not only the first team but the reserves and youth teams.

P&O, the shipping group, had a difficult session as Stena, the Swedish- owned cross-channel ferry operator, launched a new price war by cutting duty-free prices and tickets on its fast ferry service.

Orange, the mobile telephone group many experts predicted would struggle after its flotation, managed a 3p gain to 237.5p, a peak, after Kleinwort Benson support.

Brent Walker, the bombed-out leisure group, was the day's main talking point. Although borrowings are thought to overwhelm assets the shares were at one time riding at 7.75p, closing 0.5p higher at 6p.

Harmony Property, the struggling group, edged forward 0.5p to 4.25p. After failing to be able to accommodate the pounds 18.8m reverse takeover of Galliard Homes, it has settled for the pounds 1.5m acquisition of Stockbourne, a property business run by three property movers of the 1980s. Stockbourne's backers will end up with 18.6 per cent of Harmony, a pubs company that has so far limped along as a property business.

Finelist, the motor parts group, held at 308p, a peak, as it acquired its 200th branch. Its short-term aim is 250 sites.

United Energy, moving to a full listing, firmed to 13p after announcing a swing back into profits with a pounds 111,000 out-turn. US gas prices are rising and it should top pounds 600,000 this year. Assets are around 25.5p a share. Acquisitions are being sought.

Virtuality jumped 51p to 299p. It has licensed technology to one of a Japan's top toy groups.

Ennemix, a quarrying minnow, fell 2p to 34p after beating off the attentions of the giant Redland building materials group, Redland has a substantial minority shareholding.

TAKING STOCK

r Three companies took AIM yesterday. Tradepoint, the order-driven share dealing system, arrived at 175p and went to 185p. It raised pounds 7.5m, switching from the Vancouver market.

Sira Business Services, placed at 3p, jumped to 3.75p. A cleaning group trading as Cromwell Cleaning it expects profits of pounds 310,000 in the year ending today. It is looking for acquisitions and intends using its shares as ammunition.

Stentor, placed at 72p, closed at 78p. It plans an Irish telephone operation. AT&T, the US giant, will manage its network which it claims will be 30 per cent cheaper than Telecom Eireann.

Developments are expected this week at AIM-listed Trocadero, the new owner of the Enid Blyton heritage. The shares rose 6p to a 72p peak.