MARKET REPORT : Bank of Scotland unmoved by hopes of tri-centenary payout

The FT-SE 100 index gained 5.6 points to 3,214.9 and the FT-SE 250 index 13.7 to 3,511.5. Turnover was 771.4 million shares with 25,888 bargains. Government stocks retreated.

Shares of Bank of Scotland dipped 2p to 219p ahead of what should be a momentous profit announcement. The proud Scottish bank, where Standard Life Assurance has a 32.7 per cent interest, will today produce a dramatic profits advance - from £269m to about £450m.

Such a performance should be a fitting tribute to the group's 300th anniversary. And it should, it could be argued, justify a handsome commemorative dividend.

But, judging by the shares' recent performance, the stock market is not too convinced the bank's canny approach will extend to a special payment to shareholders.

Early this year the shares were riding at 246.5p. Their weakness has occurred despite awareness of the group's fattening profits. NatWest Securities has confined its dividend forecast to a modest 14 per cent increase to 5.8p a share.

Most companies are stirred into recognising a centenary with a special dividend. So a tri-centenary is unlikely to be allowed to pass without acknowledgement. The BoS profits upsurge reflects a sharp trading improvement and a big fall in bad debt provisions.

The rest of the stock market produced another uneven performance. Early gains were pulled back significantly as interest rate worries seemed to assume increasing realism.

There is little faith that the much-hyped deliberations at the G7 meeting will produce any lasting influence on currency markets. The dollar could, it is felt, come under intense pressure once it is confirmed the Washington get-together has offered little, if anything, to correct the recent currency turmoil.

At one time up 24.8 points, the FT-SE 100 index ended 5.6 higher at 3,214.9.

VSEL, the shipbuilder, steamed to yet another high, up 17p to 1,655p on the conviction British Aerospace will be given the all-clear to reproduce its takeover bid. BAe's rights issue received a 93.4 per cent take-up and the rights units were quoted at 704p. The shares gained 6p to 520p. GEC, likely to be frozen out of the VSEL bidding, was firm at 299p.

The long-running market theory is that if BAe is allowed to capture VSEL it could provoke GEC into a double strike - BAe, plus VSEL. But such a manoeuvre would clearly annoy the Whitehall mandarins and would be unlikely to succeed.

Oils lost some of their recent exuberance with British Petroleum, in heavy trading, relapsing to 452p after almost touching 460p. Shell, however, took up the running, gaining 4.5p to 734p. Clyde Petroleum and Hardy Oil & Gas were firm. Enterprise Oil added 5p to 414p.

Cray Electronics fell another 6p to 73p on its profit warning but computer group Wakebourne recovered 4p to 49p after its cautious statement.

Abbey National, at one time up 12p, ended 5p lower at 475p following its descent on an unsuspecting National & Provincial Building Society. The TSB banking group firmed 4.5p to 248p with ABN Amro Hoare Govett positive.

Aberdeen Trust has become the latest takeover favourite in the financial sector. The shares rose a further 2.5p to 102p. They have risen 10p in the past week, inspired by the attention of Jupiter Tyndall, being taken over by the German Commerzbank. With Jupiter topping up its stake in Aberdeen, speculation of a German strike has gone the rounds.

An analysts' meeting lifted Taunton Cider 3p to 147p; Reed International put on 8p to 802p following a positive analysts' get-together.

Lloyds Chemists continued to move ahead with the unlikely rumour of a Kingfisher bid still to the fore. Lloyds gained 8.5p to 227p; Kingfisher added 2p to 446p.

Gehe, the German group that looks set to take over the AAH chemist shops chain, is likely to provoke defensive mergers among the leading chemists. UniChem, the former chemists' co-operative, is seen as a possible bidder for Lloyds,. UniChem fell 2p to 261p.

Imperial Chemical Industries, shaded to 748p. First-quarter results are due tomorrow. Barclays de Zoete Wedd is looking for £180m against £103m. It believes the year's outcome could be £810m, almost double last year's figure.

There was takeover speculation on the car dealers' pitch with Henlys ahead 16p at 325p on talk of an revived offer from Cowie Group, down 2p at 259p.

Fisons added 6p to 184p in busy trading. Rumours reappeared that Zeneca planned to barge into any agreed deal between Fisons and Medeva, down 3.5p at 251p. Zeneca gained 5p to 919p.

Tottenham Hotspur found the possibility of losing Jurgen Klinsmann almost too much to bear, falling 8p to 124p.

Insurance broker CE Heath, up 10p to 245p, reflected Credit Lyonnais Laing interest; Willis Corroon remained firm on hopes of a US deal, up 3p to 160p.

An upbeat yearly meeting lifted BAT Industries 6.5p to 466.5p.

Polypipe was busily traded, up 3p at 157p. Fund managers have visited its French operation and there is talk of profit upgrades. Logica, the computer group, rose 18p to 349p with Hoare Govett said to be bullish.

Scott Pickford, a firm of oil consultants, gained 7p to 38p. The group recently issued a profits warning, prompting stockbroker Beeson Gregory to cut last year's forecast from £800,000 to £550,000. This year's estimate is now £750,000.

Memory Corporation, which has developed a system for revitalising defective memory chips, has been busily traded this week. Shares jumped to 185p following an encouraging meeting in Edinburgh. The company arrived on the 4.2 share market at 45p towards the end of last year. Richard Lucas of stockbroker Henry Cooke, Lumsden expects profits of £3.7m followed by £20m.

Prime People, a recruitment business which has experienced a number of revamps, is being reshaped again. In a reconstruction it is raising £1.08m through a rights issue and taking over Portfolio International, which specialises in recruitment for the catering and hotel industries. It arrived on the market in 1988 at 60p a share. They were suspended at 1.5p on Friday.

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