MARKET REPORT

What went up comes down even faster
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The Independent Online
A day is a long time in the stock market. On Thursday, shares romped ahead following the surprise German interest rate cut; yesterday they lurched sharply lower as the possibility of higher US rates resurfaced. The FT-SE 100 index plunged 38.3 points to 3,137.9, more than destroying the earlier gain.

The dramatic about-turn took shape once New York opened. Until then shares tended to drift lower in lacklustre trading. But with the Dow Jones Average quickly crashing 60 points London suddenly took fright, despite a US rally. What had been a gentle retreat became a rout with the index off 43.1 at one time.

There was concern about the dollar's inability to respond to the German move; then higher-than-expected US growth figures piled on the agony. Gilts were caught up in the landslide with falls of more than half-a-point.

On the bullion market, gold jumped $8.50 to $391.50 on what appeared to be a sudden, unexplained shortage. As a result gold shares firmed with Vaal Reefs up more than £2 to £44 and Monarch Resources up 7p at 140p

Shares looked vulnerable from the outset. It was the last day of the financial year for many institutions and traditionally they refrain from trading, unless they have a few loose ends to tie up. The institutional stand-off gives extra freedom to market-makers to adjust their positions. Many apparently did so. Even so, the steady flow of bed-and-breakfast and PEP trading kept kept turnover at a respectable level.

In such a weak market sell recommendations hit hard. Marks & Spencer fell 9p to 417p as Smith New Court said the shares were too high. The securities house also hit Boots, down 10p at 509p. Both shares have recently outperformed.

Others pulled lower included SmithKline Beecham (US selling); Vodafone (ahead of mobile telephone figures on Monday) and BT (the Mercury submission to Oftel).

Waters were firm on hopes others will follow the North West Water example and launch customer paybacks and special dividends. NWW rose 6p to 549p; Northumbrian gained 6p to 849p as the possible French takeover bid was duly referred to the Monopolies and Mergers Commission.

The removal of the Government's protective "golden shares" had little impression on the electricity sector. Northern Electric, under pressure to reconsider the Trafalgar House bid, edged ahead 4p to 749p.

De La Rue, the printing and paper group, managed a 4p gain to 868p, ahead of a buy note from Henderson Crosthwaite; Granada, still reacting to Tuesday's analysts meeting, gained 6p to 560p.

British Airways rose 7p to 409p on the improved outlook for its USAir associate and Lloyds Bank advanced 10p to 615p as Cheltenham & Gloucester members approved the takeover.

Ladbroke put on 3.5p to 169p on the likely tax help for football pools; Zetters gained 2p to 108p. Danka Business Systems collapsed 34p to 400p as another US group, Alco Standard, threatened to barge into the fierce struggle for control of Southern Business, the photocopier distributor.

Southern is currently supporting a 70p-a-share cash offer from Danka after jilting a bid from Berkeley Business. But Berkeley is thought to be keen to mount an increased offer. Southern rose 6p to 77p; Berkeley fell 5p to 49p.

International Communication & Data put on 3p at 14p after the long-suspected bid materialised in the shape of a 14.5p cash offer from a US group, RR Donnelley. Shareholders with 35 per cent, including Continental Foods with 10.76 per cent, have accepted.

The Continental stake was, in effect, the fee for letting its chairman David Cicurel move in to sort out ICD. Continental, up 5p at 74p, made a £514,000 profit on the Cicurel involvement.

Fitzwilton, the Irish conglomerate, gained 7p to 48p as it said it regarded a 9 per cent shareholding built up through Goodbody, the Dublin stockbroker, as hostile.

Courtyard Leisure, the London wine bar business, rose 3p to 15.5p as rumours of a reverse takeover resurfaced. Ross, the consumer electronics group where deal talk has pushed the shares higher this week, relapsed a further 1p to 3.5p.

Hampden, the Ulster do-it-yourself concern, rose 2p to 48p as two Homebase executives became directors. J. Sainsbury, controlling Homebase, has nearly 30 per cent of Hampden.

Storm, the cartoon and merchandising group, held at 6p.

Hobson, the food group, is again attracting attention. The shares edged forward to 26.25p with chunky lines of stock going through. The feeling persists a deal is near. Some wonder whether Hobson will attract an offer, with its management moving off to fresh pastures, or whether Andrew Regan, who reshaped the group, has spotted another takeover target and is planning a strike.

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