Market Report: American ruling leaves BAT enduring fag-end session

BAT Industries, the financial services and tobacco giant, endured another fag-end session as worries about its possible US health liabilities continued to gnaw at confidence.

The shares fell 13p to 452p, lowest for more than a year. They touched 585p in February.

Since a surprise US court decision, awarding a lung cancer sufferer $750,000 damages, became known the shares have been under pressure.

The tobacco barons are taking comfort from their US record; the only case the industry lost was overturned on appeal and BAT has made no secret of its belief it will emerge victorious when it challenges the latest ruling. But the stock market is acutely disturbed by the US move and the weakness of US tobacco shares.

It is clearly susceptible to rumours BAT and the other leading US tobacco groups face more reversals before they have a chance to appeal against the $750,000 award.

The tobacco turmoil is prompting many to take a fresh look at BAT. There is a growing conviction its two widely differing operations should be spilt and it should complete the demerger process it started following the abortive break up bid from Sir James Goldsmith and friends. Then it was encouraged to hive off Arjo Wiggins Appleton and Argos. Perhaps, it is argued, it should now undertake the ultimate split, leaving financial services and tobacco as stand alone companies.

The market almost kept up its record breaking run. The FT-SE 100 index ended 9.2 points down, a remarkably resilient display considering nine Footsie shares went ex-dividend, clipping 7.38 points from the index before a single share was traded. A pause after last week's breath-taking escapade was obviously necessary.

US and German interest rates are under the microscope this week. America is expected to leave its interest charges unchanged but there are high hopes the Germans will bow to pressure to lower their rates.

Trading, however, remains thin with many top players still on their holidays. Obviously, with volumes low the market is exceedingly vulnerable to swings in sentiment and a few bearish currents would have a disproportionate impact.

EMI and Thorn were the two major Footsie players - going in opposite directions. Thorn fell 19p to 391p, suffering from the expected profit taking. EMI, despite stripping out a 29p dividend, achieved what was calculated to be a 37.5p bounce to 1,460p. ABN Ambro Hoare Govett said sell Thorn; buy EMI.

Hambros, the merchant bank, jumped 14p to 256p, a 12 month high. The gain led to takeover speculation but it was claimed an institutional investor, seeking a significant investment stake, was behind the buying.

Refuge, the insurance group hoping to merge with United Friendly, managed a 13p gain to 394p, the first significant advance since the deal was announced. Unease is growing about the terms with some institutions convinced Refuge is being undervalued. Hopes the discontented could be capable of generating enough resistance to force an improvement in the Refuge slice of the combined cake prompted the rally.

Zeneca enjoyed an early burst, shooting above 1,500p for the first time. Renewed stories of a strike from the Swiss group Roche plus calculations the group's asset value is 1,912p a share caused the excitement. The shares settled at 1,490p, a 12p gain.

Stores were helped by the better-than-expected Argos results and oils scored from the Jordan flare-up.

PizzaExpress, the restaurant chain, held at 433p, a peak, as Janus Capital, the US fund which has built a significant stake in the JD Wetherspoon pubs chain, lifted its interest to 17.43 per cent.

Union, the financial group, was another unchanged - at 99p - on stake building. Melix Financial Services, related to Bahamas-based Joseph Lewis, has lifted its sharholding to 22.16 per cent. Mr Lewis' other main investment is a near 30 per cent interest in Christies International, the fine art auctioneer.

Firecrest, the internet business, had another eventful session, falling at one time to 35p. It closed at 43p, off 15p. The company needs to find new financial advisers and stockbrokers by early next month to protect its AIM listing.

Michael Page, the recruitment group, jumped 37p to 354p on results, dragging rival Robert Walters 18p to 148p. But Colleagues, a marketing group with two profit warnings in a fortnight, lost a further 14p to 105p.

Glencar Exploration was unchanged at 64p. It hopes to buy control of its Wassa goldmining operation in Ghana which could lead to a cash call.

TAKING STOCK

8Wiggins, the property group, rose 0.25p to 9.25p, nudging its peak. It is expected to score from its international business park in Kent and its intriguing plans for the reclamation of contaminated land. But it is talk of a reverse take over which seems to be responsible for the recent strength of the shares. Wiggins management would take charge of the new group.

8Cybertec, up 3p to 15p on Ofex, has fixed up a deal, said to be worth pounds 4m, with Anglo Corporation to distribute its video telephones which are used with standard personal computers.

8Walker Crips Weddle Beck, one of the biggest private client stockbrokers, is due to make its market debut on Thursday. Shares were offered at 70p.