Market Report: A frightening week ends with a rebound

IT WAS rebound day as a volatile, even frightening week ended with the stock market looking positively relaxed. Many of the shares wounded in recent Footsie gyrations staged modest recoveries, helping the index to record a 124.5 points gain at 4,823.4. Over the week Footsie rose 73.

Talk of switching out of Government stocks into equities and late futures activity prompted the rally. Bigger than expected interest rate cuts in Ireland and Portugal also helped to smooth sentiment, strengthening the possibility that the Monetary Policy Committee may find itself forced into another base rate cut next month.

There were rumours that one major fund had switched out of gilts to feed cash into equities at "some point".

HSBC, the old Hong Kong & Shanghai Banking Corporation, achieved a 130p gain - 11.9 per cent - to 1,220p. At one time the shares were up 149p.

The bank benefited from a 7 per cent rally in Hong Kong and the sudden and surprising uplift in the Japanese yen, which is seen as being likely to promote some recovery in the Asian economies.

The Standard Chartered banking group, with two thirds of its business in Asia, was another to climb on the back of the Hong Kong share market. The shares, still enjoying hopes of Lloyds TSB takeover interest, put on 35p to 505p. Lloyds rose 62p to 664p.

Amvescap, the US fund manager, was another in comeback mode. The shares have been savagely mauled in the hedge fund crisis. In the spring they were riding at 743p; they rose 53p to 333p. Reuters, weighed down by worries that any financial crisis will devastate its sales of information and trading screens, gained 27p to 456p.

Railtrack, weak recently following an investment presentation and regulatory worries, bounced 70p off the buffers to 1,485p, and British Airways climbed 16.5p to 339p.

Imperial Chemical Industries encountered more profit downgrades - CSFB was the latest to cut - but managed a 50.5p gain to 570.5p.

Food retailers had a cut-price session, thanks to the investment house BT Alex.Brown. It turned cautious on the sector, with Asda first in the firing line.

Analyst Dave McCarthy reduced his Asda profit estimates from pounds 434m to pounds 422m and from pounds 471m to pounds 450m. He said the shares, firm at 165p, would underperform.

Somerfield,little changed at 401p, and Tesco, a shade weaker at 175.5p, remain on the Alex.Brown buy list. Mr McCarthy says Somerfield's growth is driven by merger benefits and, unlike others, the chain is not reliant on sales growth. Tesco "is the superstore operator best equipped to cope in a difficult environment".

Other retailers were mixed with Boots off 30p at 925p as Charterhouse Tilney cut its forecasts from pounds 615m to pounds 585m and from pounds 670m to pounds 635m. It rates the shares as no more than a hold. Next, the fashion chain, shaded to 408p with Charles Stanley saying sell.

MFI, the furniture retailer, firmed 3p to 37p following this week's investment meetings. Even so, SG Securities said the shares were set to underperform and cut its profit estimate from pounds 26m to pounds 23m. Last year the group produced pounds 60.4m and five years ago made pounds 87.8m. Little Essex Furniture relapsed 3.5p to 11.5p.

Properties tumbled as Merrill Lynch cut net asset value estimates by up to 5 per cent with British Land falling 26p to 489p.

Burmah Castrol, no longer classified as an oil company but as a speciality chemical group, firmed 5p to 800p after a City presentation.

The mid cap index made headway, gaining 37.8 to 4,289. But for the poor old small caps it was another day of doom and gloom with the index losing another 4 to 1,834.5p, a level last seen in the early months of 1995.

Viglen Technology put on 8.75p to 22.75p as Alan Sugar raised his stake to 41.7 per cent, thereby triggering an obligation to make a full bid. Amshold, a Sugar company, paid 24p a share. In July last year Viglen was demerged from Mr Sugar's Amstrad operation.

Tullow Oil, savaged as the market has grown tired of waiting for its heralded developments in Bangladesh to materialise, managed a 7.5p gain to 48.5p. The jump followed a statement from the Irish-based oil and gas group that it remained confident of a "successful conclusion" to the Bangladeshi licensing round. The shares have plunged from a springtime 161p - a fall the company regards as "unwarranted".

There were some heavy falls on the market under-card. No particular reason was evident; it was just a case of small investors selling, with reluctant market makers lowering prices to deter others unloading. Inn Business, a pubs chain, tumbled 5.5p to 36p on small turnover; Glenmorangie, the famous malt whisky house, lost 85p to 690p. Another in the dumps was Torotrak, the gearbox group which reversed another 19p to 88.5p; the shares were around 300p at the time of the summer demerger from BTG.

SEAQ VOLUME: 997.2m

SEAQ TRADES: 63,138

GILTS INDEX: n/a

RUMOURS ARE starting to swirl around Shield Diagnostic again. The shares rose 40p (after 52.5p) to 345p as stories resurfaced that Roche, the giant Swiss pharmaceutical group, plans to take a stake. Shield, like so many healthcare groups, has experienced a volatile time, with its shares moving between 777p and 290p in the past year. The company's main claim to fame is the development of a kit to detect heart disease.

AVOCET MINING held at 17.5p. Investment house SG Securities believe the company, which lost pounds 10.9m last year, could make a profit in 2001 - it suggests pounds 200,000.

The miner's gold operations in Malaysia are going well and gold output is expected to reach up to 70,000 ounces a year.

A pounds 17m cash call reduced debt but left Elliott Associates, a US hedge fund, with a 44 per cent interest.