Market Report: American buying spree pushes Footsie back up

AMERICAN investors, who sent shivers of unease through world stock markets last week, were on a buying spree yesterday.

Encouraged by better-than-expected inflation figures, they resumed their pursuit of leading shares.

Their interest produced the first FT-SE 100 index advance for seven trading days, as a lunchtime 5.4-point fall was transformed into a closing gain of 18.4 to 3,096.

The index had fallen nearly 100 points in the account, including Friday's dramatic 63.4 plunge. A weak New York market, reflecting worries about the US economy, was responsible for what then appeared to be growing discomfort over the stock market's autumn strength. Some commentators were even tempted to draw comparisons with the 1987 crash.

British Petroleum was one blue chip to benefit, up 8p to 360p. Imperial Chemical Industries gained 8p to 710p and Unilever put on 17p to 1,127p. British Airways rose 10p to 397p.

BAT Industries, up 12p to 491p, continued to draw strength from signs that the fierce US cigarette war could be coming to an end. One leading US manufacturer announced a modest price increase, lifting hopes that Philip Morris, the industry leader that started the present turmoil in April, planned to abandon its cut-price policy. BAT has climbed 29p since the possibility of a change of direction surfaced on Monday.

Drug shares were in demand. Glaxo Holdings, SmithKline Beecham and Wellcome were firm. But the hard-pressed Medeva was the sector star.

Stories flowed that a takeover bidder, said to be Canadian, lurked, driving the shares 6p higher to 126p in busy trading.

Medeva has had a volatile time this year, tumbling from a 236p high to an 85p low. The shares lost their glamour rating as the group became embroiled in patent disputes, hit problems at its US offshoots and was forced to issue a profits warning.

But Fisons remained friendless, falling another 4p to 143p, a new low, on worries about its sales methods. Zeneca was also weak, down 10p at 753p.

The food retailers remained neglected, with Smith New Court cutting profit forecasts across the board and hanging sell signs over Argyll, Kwik Save and Tesco. Iceland is the only significant player in the sector to attract an SNC buy recommendation.

Elsewhere, Mirror Group Newspapers fell 7p to 151p over the Princess of Wales photographs and worries about a possible advertising boycott.

First Leisure Corporation gave up 20p to 257p as Cazenove, the company's broker, downgraded this year's expectations from pounds 38m to pounds 36m. The market is looking for around pounds 32m for the year just ended. Ladbroke, the betting and hotel group, ended 2p lower at 172p as a 9-million-share bed-and- breakfast deal was completed.

Williams Holdings, the conglomerate, edged forward 5p to 337p following investment meetings. TT, another conglomerate, remained firm at 333p on the back of City meetings.

SG Warburg fell 20p to 857p as take-profits advice from James Capel greeted its sharp but expected profit advance. The related Mercury Asset Management lost 23p to 679p on its results.

Burton, the clothing retailer, rose 2.5p to 76.5p as Nomura and Capel recommended the shares following sell advice from Kleinwort Benson, which frets about the chain's reliance on special promotions. 'Once a brand's price integrity is undermined, it takes blood, sweat and tears to rebuild its value,' it said.

Tate & Lyle moved ahead 2p to 382p with Williams de Broe forecasting sharp profits progress this year. It expects pounds 218m (against pounds 189.5m) to be reported later this month for the year ended September and looks for pounds 255m in the current 12 months.

Lucas Industries improved 3p to 179p, a 1993 high. An announcement is expected that George Simpson, the market's choice as the new chief executive, is about to be released by British Aerospace.

Water shares remained in the doldrums, with UBS and Warburg negative. The Anglian Water results did not help sentiment.

Newcomer Roxboro, an electronics group placed at 230p, closed at 250p. Monday's debutant Abacus continued to progress, reaching 163p against a 140p placing price. The shares are expected to move ahead to about 185p. A pounds 21.5m takeover bid pushed Multitone Electronics up 8p to 139p.

Alexanders Holdings, the Scottish car group, at one time touched 30p following the sale of the T Cowie stake to Aleksandra Clayton, the company's chairman. But the shares closed at 25p, up 4p.

A profits warning hit International Food Machinery, off 19p at 35p. Another warning casualty was FII, a footwear group. The shares fell 61p to 280p.

Psion, the computer group, advanced another 8p to 176p following its investment presentation on Monday.

Although blue chips moved ahead the rest of the market was sluggish. The FT-SE 100 index was up 18.4 to 3,096 but the FT-SE 250 index was little changed. Turnover was 724.1 million. The account ends on Friday with settlement on 22 November. Gilts were firm.

Maddox, the troubled computer group headed by Hugo Biermann, is due to report results today. Sweeping changes are expected to accompany the figures, including write-downs, board appointments and a change of name. There could also be a rights issue with shares being offered on a one-for-four ratio. The shares rose 1p to 3.5p. They have been as low as 2p.

Emerald Energy looks set for an impressive debut next week. In a classic reverse deal the company has acquired US oil and gas production assets and placed 170 million shares at 1p, valuing the group at pounds 2.6m. But the quality of the US assets and the presence of Peter Winton, ex-Tricentrol, as managing director, could, it is thought, encourage an opening price of 2p.