Investors pile in as City sets sights on the 4,000 barrier

MARKET REPORT

Suddenly an FT-SE 100 index riding at 4,000 points looks well within the stock market's reach as the Footsie powered to a new of 3,857.1, up 36.4. The supporting index retained its remarkable momentum, climbing 40.9 to yet another record, 4,534.5.

The so-called feel-good factor, demonstrated by this week's Confederation of British Industry distributive trades survey, and the seemingly never ending round of takeover speculation generated the latest excitement.

There was, perhaps, just a hint of desperation in some of the stories swirling around. But with a widespread reluctance to sell, as that 4,000 target collected more converts, the mood of confidence was never in danger of being undermined by such negative thoughts that many bid rumours would evaporate if subjected to realistic examination. Even so there is a feeling the market is striding to narrow the gap that has emerged with New York and, providing there are no unexpected jolts, further progress should be made next week.

British Gas, reflecting heavy options trading, was the top performing blue chip, hitting 250.5p with a 10p gain. Shell replaced British Petroleum as, in the eyes of the market, the most likely bidder.

Thorn EMI was given another whirl, up 33p at 1,813p, as hopes of a bid for its music division resurfaced and Micro Focus, the computer group, rose a further 167p to 1,335p as US bid talk continued.

Wm Morrison, the supermarket chain, put on 8p to 171p and Legal & General rose 14p to 724p.

British Airways climbed 21p to 558p following its trading pact with America West Airlines; Rolls-Royce surged 5p to 242p ahead of next week's analysts visit to its US operations.

Drugs enjoyed another upbeat session; British Biotech rose 120p to 2,805p; Celltech, on bid hopes, 13p to 593p and Cortecs International, following suggestions it will soon qualify for FT-SE 250 membership, 26p to 383p. Oxford Molecular, on a drugs design contract with a leading Japanese group, gained 17p to 332p.

SmithKline Beecham strengthened 27p to 703.5p as US investors continued to chase its reshaped shares. Thursday's results helped the action with two securities houses, Merrill Lynch and SBC Warburg, recommending the shares. Cantab Pharmaceutical ran into profit-taking, off 43p at 625p.

Biocompatibles International, a health-care group raising pounds 26.5m through a rights issue, jumped 74p to 484p.

Electrophoretic International, an AIM midget which is working with the Government to detect BSE in live animals, fell 13p to 107p, a new low. The shares have been as high as 200p.

Associated British Foods and Bank of Scotland, both with figures next week, made headway. ABF rose 12p to 411p and BoS 9p to 261.5p. Hanson remained in demand as the demerger continued to attract support, up 4.25p to 200.25p.

Premier Farnell, the components group due to report on Monday, gained 27p to 717p. With a market capitalisation of pounds 1.5bn, following its controversial takeover of the US Premier group, it could be set to join Footsie.

Utilities remained in demand with National Power up another 4p to 592p. London Electric, which has emerged as the hot takeover tip among the distributors, put on 4p to 817p. There were stirrings in some of the secondary water shares - Cambridge rose 9p to 277p - and United Utilities led the heavyweights with a 14p advance to 614p.

Firth, the steel group, held at 54.5p as Sri Inderajaya, said to be a Malaysian investment group, continued its seemingly relentless pursuit, picking up a further 250,000 shares and lifting its holding to 14.63 per cent.

Vision jumped 18p to 257p after confirming its trading link with the Fisher-Price toys group and a placing of 1.5 million shares at 227p. Fisher will use Vision's monochrome image sensor in its children's instant camera.

Director-buying accounted for a gain of 5p to 43p by Self Sealing Systems. A company related to director Anil Varma picked up 2,500 shares, lifting his stake to 37.4 per cent. The shares of the maker of balloon sealing equipment were floated on AIM at 54p in January.

Memory Corporation, which has been in ragged retreat, gained 18p to 198p. It has slumped from more than 550p this year on disappointment with the sluggish progress of its micro chip repairing project.

TAKING STOCK

rJennings Brothers, the Cumbria brewer, held at 310p as Samuel Smith Old Brewery, a privately owned Yorkshire group which is regarded as one of the most reticent brewers in the country, cut its shareholding to 4 per cent.

Last year Sam Smith had a 15 per cent interest. At one time it looked as though it would bid after the Cumbria group ended a supply agreement. Since it moved to AIM in August Jennings shares have climbed from 210p, pricing the company at nearly pounds 23m.

rGraseby, the electronic and medical group, has a poor record but hopes are riding high it is back on the growth trial. Profits last year fell to pounds 6m but around pounds 12m is likely this year, putting the shares, at 134p, on 10 times forward earnings.