Market Report: Abbey National breaks through Asian gloom

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Asian turmoil returned to haunt the stock market. At one time Footsie was down 131.1 points; it ended off 94.8 at 5,035.9.

Supporting shares, which have sadly under performed their peers this year, had a much more relaxed time as the spotlight concentrated on blue chips with Far Eastern exposure.

So HSBC fell 84p to 1,536p and the Standard Chartered banking group 27p to 698p.

The market, however, remained receptive to old fashioned, unadorned take over rumours. Not surprisingly the latest escapade featured two financial high flyers, Abbey National and General Accident.

Of the handful of blue chips to record plus signs Abbey led the way with a 22p gain to a 1,035p peak and GenAcc trotted behind, up 16.5p to 1,054p, a shade below its all-time high.

Rumours, as even the most casual observer of financial shares must be aware, have swirled around for much of this year. The Merrill Lynch strike at Mercury Asset Management, the investment banking retreats of Barclays and National Westminster Bank and the Swiss roll of UBS and Swiss Bank Corporation are merely the latest examples of the dramatic upheaval which is transforming the investment scene.

The former building societies are flushed with cash. Abbey, the first to become a bank, has demonstrated the rich benefits available from conversion and with its shares riding at a record level must feel it has the muscle power for a strike at a major quoted group.

Insurance would represent an intriguing expansion and GenAcc an ideal target.

Abbey has made no secret of its burning ambition to use its market clout - it is capitalised at around pounds 14.5bn - and has even looked in the direction of NatWest.

The Abbey display was helped by positive comments from Merrill Lynch, which is thought to have sharply increased its profit estimates, and SBC Warburg.

The Asda/Safeway story took a breather with Asda off 2.5p to 173p and Safeway 10.5p to 344.5p. In general retailers had another poor session as Christmas trading worries continued to hit sentiment.

Cairn Energy, the oil and gas explorer, was one to buck the market trend. The shares flared 12.5p to 497.5p as hopes about the eventual Bangladesh concession continue to flow. In the meantime the market had an encouraging drilling report to dwell on and positive comments on prospects from Merrill. But Enterprise Oil tumbled 25.5p to 582.5p. Technical problems forcing the suspension of drilling at its Italian Monte Foi field and worries about the crude price did the damage. Lasmo lost 10.75p to 261.25p.

Railtrack remained on the down line, off a further 53p to 943p following the regulator's threatened review.

Orange, the mobile telephone group, felt the impact of Societe Generale Strauss Turnbull

sell advice, falling 10p to 250p. Racal Electronic rose 14p to 234.5p as chairman Sir Ernest Harrison plucked his third demerger out of the hat. He intends to float Racal's remaining telecoms operations and sell its loss-making data products side.

The telephony share sale will follow similar exercises featuring Vodafone and Chubb Security (now owned by Williams).

RJB Mining gave up half of Wednesday Tony Blair inspired rise, ending at 250p, and Christie's International, the fine art auctioneer, surrendered 14p of the take over fuelled advance to end at 292p.

Take over action among the market's under card players created interest. ILP, a packaging group, rose 5.5p to 29.5p on a bid approach and electronics group Plasmac rose 40p to 225p on the agreed pounds 11m offer from Arlen at 230p a share.

Talks about a possible bid for engineer Triplex Lloyd provided a 34p uplift to 263.5p. After hours Armour Trust, the car accessories group, said bid talks had ended; the shares, 21p, will go lower today.

Newcomer the Autologic transport group motored to 264.5p from a 250p placing. The Sytner garages chain ended at 231.5p against a 230p placing. Bovis Homes, which arrived on Wednesday at 200p, fell to 188.5p in a house building sector weighed down by worries that the house price spiral was over.