MARKET REPORT : Allied Domecq in shape to retain Cinderella rating

Allied Domecq's surprising decision to keep its shape caught the stock market on the hop. The shares slumped 16.5p to 468p, the worst performance of any blue chip, as the weekend guidance that new chairman Sir Christopher Hogg had decided to stick with his inheritance and not indulge in a demerger took its inevitable toll.

The market had been convinced that struggling Allied, a long time underperformer, would split itself into two - retailing and spirits. But Sir Christopher, who divided Courtaulds into two-stand alone companies, has, it seems, decided to stay with Allied's sprawling mixture of interests.

The drinks group is due to announce its results today. They will be poor. Unless there is a positive trading statement the shares are likely to head back towards the 422p low hit in August.

Yet another round of Allied misfortune is something the market has learned to accommodate with the shares for long regarded as the Cinderella of the drinks industry.

The market had an uncertain session, managing, on the back of New York, to close with a modest plus, up 3.6 points at 3,914.4. Turnover was again thin with few investors prepared to chance their arm.

East Midlands Electricity achieved a 10p gain to 603.5p although the signalled strike from Dominion Resources failed to materialise. CMS, another US group, still lurks and there is talk Dominion is trying to play a waiting game with its rumoured US rival.

Eurodisc Electronic, an electronic components distributor, fell to a new low, off 16p at 154p. Earlier this year the shares topped 300p with talk of a bid of around 360p a share. The group is the victim of a change of mind by Elektrowatt, the big Swiss group. It merged its electronics business with the old Electronic House and emerged as a 42 per cent shareholder in the combined group, Eurodisc. Elektrowatt was seen - and managed to give the impression - it was a long-term shareholder.

Then came the change of direction. The Swiss said they intended to sell their stake to the highest bidder to help pay for their takeover of Landis & Gyr, an electronics business.

There was, however, no rush to buy and Elektrowatt, through UBS, had to resort to an institutional placing at 220p to unload its shares. Since then Eurodisc has warned of difficult trading conditions.

Guinness firmed 1.5p to 437p. NatWest Securities is puzzled by the shares' big discount to the market - a reversal of the rating of five years ago. The securities house think the price should be 10 per cent higher.

My Kinda Town, the restaurants group, gained 20p to 187p as Capital Radio emerged as the bidder. The media group's surprising new wavelength left its shares 16p off at 577.5p.

Chelsea Village, the football club, remained in the takeover tunnel, up 12p at 117.5p. Newcomer Majestic Wine, a drinks warehouse chain, enjoyed a heady ferment, stretching to 204.5p from its 160p placing. Scottish Highland Hotels was slightly more inhibited, gaining 12.5p to 137.5p.

Railtrack steamed ahead 13p to 289p ahead of profits figures on Friday. A 74 per cent surge to pounds 155m is expected. The controversial share sale has so far been a runaway success for the army of Sids which alighted on the last big privatisation exercise of the present Government. Talk of huge property assets and intriguing plans to exploit these riches have helped drive the shares from a springtime 190p flotation price.

Bellway, the builder which raised pounds 16m through a placing on Friday at 423.5p, held at 342.5p. Stockbroker Charterhouse Tilney has nudged this year's profit forecast higher to pounds 37.5m and is shooting for pounds 44m next year.

The shares, it says, are "one of the safest and most attractive in the sector".

Blue Circle Industries added 8p to 386.5p as analysts examined its US operations and Wolseley rose 9.5p to 455p on HSBC James Capel support. Aviva Petroleum gained 8p to 40.5p with some speculators pondering the possibility of a bid for United Energy, unchanged at 16p.

Roxboro, the electrical components group which fused on Friday after another profit warning, managed a modest rally, up 12p to 135p, on director buying.

Chesterfield, the property group gained 41.5p to 544p as Robert Maxted's property interests were reversed into the company and Mr Maxted emerged as chief executive. He is expected to sell Chesterfield's London West End theatres. Greycoat rose 5p to 154p as it resisted a bid from Moorfield Estates.