Market Report: Accent on recovery hopes as Tory blues are ignored

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The Independent Online
THE BEAR market, which sent shares crashing to their lowest since August, is looking increasingly remote.

On a day when the Conservative election blues could have produced another jittery session shares moved ahead with a dashing display of confidence and the FT-SE 100 index closed 27 points higher at 3,055.9.

Banished, at least for the time being, were all those worries about inflationary pressures and higher interest rates.

The by-election defeats, as well as the widely expected Tory European disaster, had been discounted and could, ran the message, provoke a Cabinet reshuffle that could be good for sentiment.

In such a blissful atmosphere it was time to concentrate on the economic revival and another set of poor trade figures was ignored, or at least tailored to fit the more bullish story.

The Prime Minister's belated assurance that the Government did not plan dividend restrictions is, in a low-key way, continuing to help sentiment and with the added spur of a firm New York opening the market's progress, admittedly in moderate trading, gathered strength as the day progressed.

In such a relaxed atmosphere even the hard-pressed food retailers, devastated by squeezed profit margins, perked up. Tesco led the way with a 10.5p gain to 227.5p with J Sainsbury, the subject of a Yamaichi buy recommendation this week, up 3p to 395p.

Argyll put on 6.5p to 247.5p and Asda 1.75p to 56.75p. Takeover favourite William Morrison rose 3p to 125p.

Insurances were unsettled as Commercial Union duly confirmed its interest in Groupe Victoire, the French group.

CU, which intends to make a rights issue, fell 5p to 533p, General Accident 8p to 559p and Royal Insurance 2p to 255p.

TransAtlantic, the South African-influenced insurance group, edged forward 4p to 347p. In a shareholding shuffle its chairman, Donny Gordon, has acquired 7.5 million shares and now has 24.9 per cent.

On Tuesday Union des Assurances de Paris said it had lifted its interest to 22.47 per cent. TransAtlantic and UAP control Sun Life.

Cadbury Schweppes was another to retreat. It fell 13p to 452p following the surprise PepsiCo statement in New York that a US soft drink price war had put margins under pressure and profits would be flat.

There are worries that PepsiCo's problems could indicate difficulties for Cadbury's still-to-be-developed US involvement. It takes in the A&W drinks group and a shareholding in Dr Pepper/Seven- In this country Cadbury is closely linked with Coca-Cola.

Royal Bank of Scotland was 1p down at 414p following a 14 million share placing. Smith New Court, in a bought deal, is thought to have paid 402p to the selling institution and then placed the shares at 406p.

Oils were excited by a US indicator pointing to higher crude prices. British Petroleum jumped 12p to 389p and Shell 11p to 709p. British Gas gained 15p to 293.5p.

Enterprise Oil, ahead of an expected improved offer for Lasmo, rose 10p to 410p although the market is coming to the view that Lasmo, up 3p to 142p, is likely to escape its tormentor's clutches.

Electricities had a bright session with Kleinwort Benson and S G Warburg said to be positive on the sector. PowerGen, following its results and sharp dividend increase, rose 9p to 488p.

It is felt the group's gathering cash pile could prompt a share buy-back programme. Waters made more modest headway with the expected Ofwat pricing clamps overshadowing trading.

Three newcomers came on the scene. Amey, the roadbuilding materials group, managed a 2p premium over its issue price at 163p.

Lombard Insurance, sold at 160p, closed at 161p but UPF, a maker of car chassis, had the best reception, stretching to 119p from the 108p placing.

BAA rose 21p to 950p on better-expected May traffic figures but the Channel price wars unsettled P&O, 6p lower at 652p.

Bredero, the property struggler, gained 2.5p to 13p as British Land barged into what had appeared to be a cosy deal - a takeover by Slough Estates, already sitting on 49 per cent.

British Land snapped up 7 per cent of Bredero, which could force Slough into increasing its 10p-a-offer.

Burford's pounds 93m Trocadero deal produced positive comments from Smith New Court and a 7p advance to 112p.

Tadpole Technology slipped 3p to 316p as its share sale to shareholders at 260p achieved an 88.08 per cent take-up.

International Communication & Data slipped 1.5p to 9.5p. Talks that could have produced a bid from the unquoted PSB Group have been called off.

The FT-SE 100 index jumped 27 points to 3,055.9 and the supporting FT-SE 250 index gained 9.2 to 3,608.5. Turnover was 618.2 million shares with 22,955 bargains. The account ends on 17 June with settlement on 27 June. Government stocks were quietly firm.

Regal Hotels returned at 2p, the price at which the shares were suspended for an pounds 11m cash-raising exercise at 1.75p. Trading was brisk, with Seaq putting volume at 28 million shares. Since it was rescued from the corporate graveyard through a voluntary arrangement Regal has made four cash calls. It now has nine hotels and runs two under contract. Another acquisition is expected soon.

A large line of Hobson is thought to have been cleared. About 30 million shares were on offer and the last 10 million is believed to have been placed by stockbroker Peel Hunt. Hobson sprang to fame with the pounds 111m takeover of the Co-op's food producing operations. It is thought to be involved in talks to sell some of them - for, perhaps, pounds 30m. The shares rose 0.25p to 22.25p.

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