Exuberant blue chips come within a whisker of 4,200; MARKET REPORT
Friday 17 January 1997
The index closed at a peak of 4,197.5p, a gain of 38.6. At one time it seemed to be about to break through the 4,200 barrier. In late afternoon it touched 4,198.9 but shares were unable to work up sufficient energy, with the Dow Jones Average retreating from its high point, for the final push.
Even Hanson, with its break-up nearing completion, enjoyed the fun. The once feared conglomerate put on 3.5p to 89p on what appeared to be heavy US buying. It has already demerged its Imperial Tobacco and Millennium Chemicals operations and the Energy Group, consisting of Eastern Electricity and Peabody, the largest US coal miner, is due to go its own way in the next month or so.
ABN Amro Hoare Govett has this week made positive noises, suggesting once the final part of the demerger is in place the Hanson rump will be worth 44p.
Blue Circle Industries led the blue chip charge, putting on 15.5p to 391p with Merrill Lynch offering support. Royal & Sun Alliance added 16p to 468.5 as Salomon Brothers decided it was the best bet in a strong sector.
GKN, one of the major casualties of the strong pound, recovered 31.5p to 971.5p after SBC Warburg said the shares were oversold.
But it was not all one-way traffic. Credit Lyonnais Laing, a long time bull of Abbey National, switched its recommendation from buy to hold, lowering the shares 12p to 784p.
Insurance brokers were active as Lowndes Lambert, up 7.5p to 116p, and Fenchurch, 10p higher at 70.5p, signed a merger agreement. Sedgwick, not for the first time, was put forward as the next candidate for corporate action, gaining 7.5p to 136.5p. A US strike, probably from Aon, is seen as the most logical development.
Others higher as speculators looked for the next victim included Willis Corroon, up 5p at 148.5p. Oriel held at 133.5p. It has been involved in takeover talks for nearly a year. In February it said had received tentative approaches. The last communique was in September when the company reported it was continuing to receive overtures.
Securicor, the security group with a 40 per cent interest in the Cellnet mobile telephone service, gave ground although Henderson Crosthwaite has signalled a target valuation of up to 435p. The price eased 5p to 276.5p.
Cadbury Schweppes, the soft drinks and sweets group, was another to miss the fun, off 5.5p to 476p. The shares are near their 12-month low. The market is worried about the fierce competition the group is facing in the US from Coca-Cola; there is also a concern that SmithKline Beecham plans to sell its health drinks division, Lucozade and Ribena, and Cadbury is a possible buyer.
John Menzies, the newsagent, was the day's major casualty, falling 67.5p to 477.5p following figures. Carpetright's results were well received, with the shares 7p higher at 598p, despite a four million share sale through Warburg by chairman Lord Harris. Goldsmiths, the jeweller, placed 1.1 million shares at 370p, raising pounds 4.05m for branch openings. The shares rose 15p to 395p.
Takeover hopes linger around the two remaining electricity distributors. Kleinwort Benson believes Yorkshire Electricity is worth 870p to a bidder and Southern Electricity 835p. Yorkshire rose 14.5p to 833.5p and Southern fell 2.5p to 791p.
Cruden Bay, the old investment trust, being revamped as an engineer, held at 79.5p. An analysts' visit is due next month to see its first acquisition, a gas and water engineer.
Lanica Trust ended 162.5p down at 1,387.5p. It was, following its statement that it knew of no reason for its surging share price, at one time down 612.5p.
Sheffield United, the old Conrad group, returned to market. At one time up to 145p the shares closed at 101.5p against a consolidation price of 60p. Tottenham Hotspur, indulging in a five-for-one share split, gained 46p to 685p.
Fortune Oil added 1.75p to 14.25p as rumours swirled of more deals in China. It is said to be on the verge of increasing its chain of petrol stations and is about to fix up an aviation deal with the Chinese Government.
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