Market Report: Alliance & Leicester debut leaves financials on high

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The Independent Online
Alliance & Leicester dominated the stock market. First-time dealings in the building society-come-bank inspired other banking shares and were, therefore, a major factor in an upbeat Footsie display.

From the moment the first transaction was recorded there was a continuous flow of deals, most small and, somewhat surprisingly, mainly balanced towards buying. The message that, for technical reasons, financials were the shares to back in this election year has clearly captured the imagination of private investors.

The first deal on City screens was the Cazenove Friday evening auction when the stockbroker sold 52.36 million shares at an average price of 522p.

Within seconds it was clear the buying institutions had got a bargain and the former building society members who allowed their shares to be packaged for auction could, with a little patience and sophistication, have been "smarter investors" and got a better price.

The deal following the Caz notification was for 9,100 shares at 545p. And that set the pattern for the day's trading, except that hundreds of deals in hundreds of shares went through.

The Caz auction was punched into the system as a single trade. Under normal reporting procedures it would have been entered at least twice so the Seaq volume, put at 88.88 million, should have been over 140 million, or more than one fifth of the day's turnover.

Alliance peaked at 576p; closing at 566.5p, a level which exceeded market expectations.

It is, with institutions still short of Alliance, still possible that the so-called price bubble was exaggerating interest. But with Alliance attracting takeover talk there is a suspicion the shares have farther to run.

The rest of the money sector basked in the Alliance glow with many institutions reviewing their financial exposure. The feeling is that those which have not already done so will expand their overall financial portfolio to adjust for the building society conversions.

Abbey National, the trend setter for the converters, gained 14p to 812.5p, a peak. Barclays rose 18.5p to 1,028.5p and National Westminster Bank, which had the added spur of favourable comment from Fox-Pitt, Kelton, a stockbroker specialising in financial shares, 18.5p to 697p.

Bank of Scotland, figures this week, improved 14p to 339.5p.

Footsie ended 18.2 points higher at 4,328.7. But for Alliance it would have been a downbeat session.

BT, up 7p to 451.5p, was the most actively traded share after Alliance, reflecting its Spanish deal and expectations of its digital TV venture with BSkyB. Support from ABN Amro Hoare Govett, signalling a 465p target, and Goldman Sachs was also a factor.

Reed International, in its ex-dividend form, rose 7p to 1,131.5p on talk its Dutch partner is planning a Nasdaq presence. Another Anglo-Dutch constituent, Unilever, was fattened by Morgan Stanley support, up 15.5p to 1,594p. The shares also responded to reports that at least three international groups, Akzo Nobel, DuPont and Imperial Chemical Industries, were bidding for its unwanted chemical side.

Bass was flat with Lehman Brothers caution trimming the shares 5p to 790.5p.

Reckitt & Colman, the household goods group, put on 7p to 807.5p on NatWest Securities support. The same investment house made positive noises about Somerfield, the supermarket chain which made such a hesitant debut last year. At one time the shares were due to be floated at 190p; they eventually arrived at a cut price 145p. The price closed at 180.5p, off 1p.

Cordiant's break-up decision gave the shares a 5.5p uplift to 135.5p.

Late selling lowered Associated British Ports 12p to 260.5p and Symonds, the electrical group, suffered the indignity of further profit discomfort, off 9p at 38p.

Raine, the building group, bowed to market speculation and said it was in talks which could lead to a bid. It said any offer would be a share exchange worth 19.5p. There is, however, a feeling in some quarters another offer is being prepared. Shield Diagnostic fell 65p to 497.5p with some observers unimpressed by director share sales at 530p - the same price at which the company raised pounds 2.9m last week.

RJB Mining, off 20.5p to 412p, was hit by indications PowerGen had signed with overseas coal producers. PowerGen rose 7.5p to 649p.

The strong pound continued to take its toll, clipping EMI 14.5p to 1,176.5p and British Steel 1.75p to 146.5p.

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