MARKET REPORT : Wall Street's energy powers shares further ahead

With perhaps a cruel sense of irony shares were in rampant form as SG Warburg, once the City's big hope for international honours, relapsed into the arms of the abrasive Swiss Bank Corporation.

At one time Warburg touched 883p against the effective 850p valuation as hopes abounded that a counter-offer would materialise. But doubts set in and with some happy to snatch profits the shares closed 32p off at 805p in busy trading. The possibility that the cash and shares will not be distributed until August was another inhibiting factor.

Mercury Asset Management, being freed from the Warburg yoke under the terms of the deal, lost 19p to 882p.

The sad Warburg saga had little impact on other financial shares although the stock market was extremely buoyant, inspired by a strong performance by government stocks, up almost one-and-a-half-points. A steadier display by the pound, vindicating in the eyes of some market men the controversial no-change interest rate decision, was another contributory influence.

New York's recent strength is also having an increasing impact on sentiment, with the view growing that the Americans may find it possible to avoid any further interest rate increases.

The FT-SE 100 index jumped 28.9 points to equal its year's high of 3,290.1. At one time it was up 33.3. Second line shares were also strong.

United Biscuits represented the day's black spot. A profit warning sent the shares tumbling 18p but, in busy trading, the old takeover spectre re-appeared and the retreat was trimmed to 15p at 331p. NatWest Securities has cut its profit forecast from £177m to £155m.

Royal Bank of Scotland was another weak counter as its results and modest dividend increase deflated the shares, off 8p to 404p. Unilever was also down again, reflecting the disappointment with its quarterly figures, losing another 17p to 1,195p.

Rolls-Royce, the aero engine maker, rose 5.5p to 185p, still reflecting its rights issue success and also drawing strength from the prospects of an Australian order and rumoured investment meetings by its US rival Pratt & Whitney.

Kingfisher, thought to be holding investment meetings, gained 9p to 475p

Northern Electric added 19p to 819p as the requisitioned meeting to consider Trafalgar House's 950p a share offer was set for 2 June. But Trafalgar could nurse ambitions to capture Northern at an even lower price.

Insurances were firm, helped along by better-than-expected results from General Accident, up 13p at 586p. Commercial Union, figures next week, rose 10p to 582p and GRE 7p to 197p.

Banks were generally firm with Lloyds up 16p at 667p following Barclays de Zoete Wedd support. Abbey National, reflecting its expansion plans, gained 15.5p to 486p.

Nerves were exposed at VSEL as the expected clearance of the British Aerospace offer remained intriguingly elusive. The market has been on tenterhooks for weeks. Shares of the shipbuilder sank 10p to 1,673p although BAe, the market's favoured bidder, gained 10p to 541p. GEC, expected to be squeezed out of the battle, jumped 6.5p to 314.5p. Hanson rose 2p to 340p as investment presentations for its US spin-off continued.

Grand Metropolitan, interim figures today, was firm at 402p. Allied Domecq, with half-time figures next week, rose 14p to 561p as NatWest forecast a 19 per cent increase to 402p. Whitbread frothed up 7p to 589p, a high for the year.

The hold on interest rates helped builders with Bryant and Beazer among those higher. Properties also scored gains.

Cookson, meeting analysts, gained 5p to 238p; Holliday Chemicals added 7p to 215p on James Capel support.

Tadpole Technology continued to baffle the market. The shares fell 9p to 178p, lowest for more than two years. They have come down from a 435p peak in November. The latest setback, following some small selling orders, seems to have surprised the company and its supporters.

Unipalm, 120p a few weeks ago, moved ahead 35p to 240p as it announced a link with Mercury which will provide Internet users in the UK with easier dial-up access.

Tefnel, the medical equipment group which has been in demand as a broker seemed prepared to mop up all the stock on offer, suddenly ran into selling, falling 7p to 33p.

Magnum Power, producing a chip to protect a computers' power supply, gained 11p to 192p with persistent small buyers seeking shares. They were floated in August last year at 35p

There was some excitement among port owners following Clydeport's move to win control of Dundee port. Forth rose 6p to 515p and Mersey Docks 34p to 438p.

Wagon Industrial, bidding £21.4m for Sumit investment trust in what is, in effect, a disguised rights issue, fell 4p to 485p. Sumit rose 5p to 220p.

Civil engineer Donelon Tyson recovered from seeing its Tysons Construction off-shoot slipping into administrative receivership with a 2.25p gain to 6.5p.

o Midland & Scottish Resources, which has been described as one of the most attractive shells in the stock market, has doubled in two days - to 4p. Some suspect the sudden stirring could be heralding a deal. The company was almost sunk by its unhappy involvement in the Emerald North Sea oil field. It has recently cut its losses and there are hopes it can clamber back into profits if it is able to salvage deals from the Emerald wreckage. Midland shares brushed 200p five years ago.

o Gus Carter, the biggest bookies in the north-east, has made a winning debut on the market. The shares, placed at 80p, galloped to 97p in often busy trading. The group, which has a total of 72 branches, is expected to use its shares for acquisitions and is looking for a presence in the South.