Halifax and A&L add their weight to the 100 club

MARKET REPORT

Financials increased their already powerful Footsie presence when, as expected, the former building societies, Halifax and Alliance & Leicester, joined the exclusive club.

Burton, the stores chain, and Smith & Nephew, the healthcare group, were relegated to the supporting FTSE 250 index.

Halifax, with a capitalisation of pounds 17.6bn, is ranked as the eighth largest quoted company. A&L (pounds 3.6bn) is 67th. They join Footsie a week on Monday. Halifax eased 5.5p to 756.5p and A&L 4p to 619.5p. Burton fell 4.5p to 126p but Smith firmed to 172.5p.

With the Norwich Union insurance group destined for membership after dealings start next week and other former building societies set to join, the index's heavy financial weighting could be regarded as disproportionately powerful.

Financials already have an extensive Footsie presence and it is the strength of its 17 money shares which has played a significant part in the blue chip index's dramatic surge this year. Footsie's strength has failed to inspire the rest of the market.

Gallaher and Avis Europe are among the 250 newcomers. Laura Ashley, Albert Fisher and ML Laboratories are included in the casualties.

Footsie's four-day winning run came to an abrupt end. The signalled pounds 3.6bn bid for Energy and more New York records encouraged an early flourish, pushing blue chips briefly to a peak. But there was little follow through and for much of the session blue chips seemed content to drift aimlessly.

Second and third liners, however, had a better day. The 250 index edged forward and the FTSE SmallCap Index moved into positive territory.

Financials were mixed. NatWest Securities took a shine to Barclays, lifting the shares 5p to 1,227p but positive noises from HSBC failed to inspire Lloyds TSB, off 4p at 624p. National Westminster Bank, where there is talk of institutional discontent, fell 18p to 786p with Salomon Brothers thought to have trimmed its forecasts by pounds 70m to pounds 1.82bn and by pounds 70m to pounds 2.05bn.

Oils had an uneventful session with Shell edging ahead 0.5p to 1,217p on rumours it had made a rich find in Nigeria.

Enterprise Oil fell 8.5p to 680p as Societe Generale Strauss Turnbull suggested some profits should be locked in.

Energy headed the blue chip leader board with a 61.5p gain to 641.5p in busy turnover. At one time the shares were 85p higher but a combination of profit taking and regulatory jitters reined back the charge.

Southern Electric, the remaining regional electricity group operating under its own banner, gained 15p to 431p as the market awaited what is regarded as the inevitable bid.

PowerGen, 14p to 695p, and Scottish Hydro Electric, 20.5p at 421p, were higher on speculation they could be caught in the takeover action.

General Electric Co improved another 7p to 360.5p as rumours about a merger with British Aerospace continued to fly around; BAe rose 15.5p to 1,365.5p, helped by an analysts visit to the Airbus facility at Toulouse in France.

Booker, seeing analysts next week, shaded to 277.5p and Cadbury Schweppes, with an investment presentation due, retreated 5.5p to 526p.

Argos, the catalogue stores chain, fell 20.5p to 575p as ABN Amro Hoare Govett, which regards the shares as a hold, trimmed its profit estimates. Danka, the US-controlled office equipment group, put on 18.5p to 620p with talk it has lined up another bid target. A cash call could accompany any deal.

Biotechs had a downbeat day after Lehman Brothers predicted they would suffer a summer of indifferent health. British Biotech fell 9.5p to 238p; Chiroscience 11.5p to 269p and SkyePharma 4p to 83.5p. Shield Diagnostic lost 35p to 497.5p.

European Colour, the niche pigment and coatings group, firmed to 63p after rolling out a 31 per cent profit gain to pounds 3.8m. Sterling's strength retarded progress by around pounds 400,000. Credit Lyonnais Laing expect profits of pounds 4.6m this year. Last summer EC paid pounds 13.4m for Tor Coatings and remains acquisitive.

Timber group Meyer International produced better-than-expected figures, gaining 16p to 431p. Travis Perkins jumped 26p to 471.5p in sympathy

Integrated Asset Management, the fledgling financial group, was suspended at 125p as it duly confirmed the acquisition of stockbroker John Siddall. Chemring, the military equipment group, jumped 22.5p to 100p after company doctor Ken Scobie took over as chairman. In the past 12 months Chemring has fallen from 445p; profit warnings did most of the damage.

Taking Stock

Talk of a regional brewery bid is going the rounds. One suggestion is Greene King, the East Anglian group, could move on Gibbs Mew, the Salisbury brewer. Greene made an unsuccessful bid for Morland but has since splashed out pounds 197.5m for The Magic Pub Co. Gibbs has found the going tough and profits for the year ended March are expected to be around pounds 3m (pounds 5.2m).

Drew Scientific eased 2.5p to 147.5p. It has brought forward the development of its new blood tests which could detect heat problems and hopes to launch this year. Yamaichi has estimated Drew could make profits of pounds 2.25m by 1999.

Allied Domecq, near its low at 418p, is expected to raise pounds 12m today by selling 100-plus pubs to a new venture capital-backed company.