Market Report: Bad news bears give shares a mauling

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The Independent Online
THE bears mauled the market yesterday, taking their cue from an overnight fall on Wall Street and slightly worse than expected UK trade figures.

An opening 13.8-point fall in the FT-SE 100 index set the tone for the day.

At one stage the index was down 46.8 points amid big concerns about interest rates in the US as American Treasury issues fell in early dealings on Wall Street.

The expiry of stock-index options in the UK did not help matters. Trading on Liffe was frantic. Nearly 50,000 lots were traded, of which slightly more than half were in FT-SE options.

The omens from the futures market do not augur well for the stock market for the next month. Traders on Liffe said many accounts rolled over positions for October.

Other upsetting news was that German M3 money supply grew an annualised 7.7 per cent last month. The market had hoped for a significant fall in growth.

However, London share prices did stage a small rally towards the close. The FT- SE 100 index closed 30.4 points down at 3,032.8. The cumulative loss this week is 74.9 points. The FT-SE 250 index yesterday retreated 22.5 points to 3,502.4.

The plunge in share prices was again set against the backdrop of low genuine equity trading. Only 516 million shares had changed hands at the end of business, and there were fewer than 22,000 trades.

Looking ahead, the Merrill Lynch investment house has published a European investment strategy report dauntingly titled The Coming Collapse in Market Multiples. It says: 'It seems likely that the 1994 price earnings multiples in Europe, which we estimate are now in the high teens to high 20s on average, could fall to 10 or less.'

British Petroleum was one of only 11 of the leading 100 shares to escape yesterday's mauling. Smith New Court and NatWest Securities advised clients to buy ahead of third-quarter results a week on Tuesday. NatWest says that BP's underperformance of 5 per cent since early October has now allowed for dollar weakness, and with significant further exploration success in hand, and oil prices set to rise further over the winter, risks remain positive.

The giant Grand Metropolitan drinks and foods group, however, was pulled 11p lower to 404p. Damage was caused by Borsen in Denmark firmly denying rumours it was about to sell Danish Distillers to IDV, owned by Grand Met.

Other big names among the walking wounded included Euro Disney, which fell to an all-time low with a decline of 7p to 78p. Prince Al Walid of Saudi Arabia has bought 74.6 million shares from Walt Disney. He now owns 24.6 per cent while Disney's stake has fallen from 49 to 40 per cent.

Eurotunnel had a better day, recouping some of the recent losses with a 10p advance to 209p despite yet another failure of one of its Eurostar trains outside Calais.

Elsewhere, Azlan moved to try to repair the damage caused by recent rumours of an institution looking to off- load shares, and unsubstantiated speculation that trading had been below par.

The share price, which dived 32p on Thursday, closed 4p better after the company said it was confident of a 'significant improvement' in financial performance in the second half.

It added that unaudited results for the half-year to 30 September 1994 were in line with management expectations and showed operating profits of around pounds 1.2m with sales of pounds 37.7m.

Videologic, one of the many other new issue disasters, fell another 2.5p to 20p, against this summer's flotation price of 45p.

Shares in Borland, the computer software group, took another pounding on further reflection by analysts on its second-quarter figures on Thursday.

The price on the Unlisted Securities Market stock plunged by 100p to 650p.

Thursday's after-hours profits warning finally caught up with Hampson Industries, which dropped 14p to 52p.

Hunting eased 3p to 159p on a 23.7 per cent half-year profit fall. Some full-year forecasts have been cut from pounds 35m, to around pounds 30m.

This week's additions to the full list had a mixed day. Whitchurch, which started life at 54.5p, rose 2p to 60p. ServisAir, floated at 135p, closed 3p down at 146p.

A refinancing of Cdollars 10m of long-term debt was greeted with a 28 per cent rise in Needler's share price from 36p to 46p. The Canadian building materials group, which is quoted on the Stock Exchange Alternative Trading Service, has had its assets independently valued. They show an excess over book value of Cdollars 44.5m.

There was a strong rumour that the suspension of dealings in Bula Resources would be lifted next week. Shares in the tiny Irish oil explorer last traded at 3.5p. The gossip is that Bula will announce a share issue to help fund its development of some oil wells in Russia, which could lift its net asset value into double figures.

Share prices fell sharply. The FT-SE 100 index lost 30.4 points to 3,032.8, taking the total decline over the week to almost 75 points. The FT-SE 250 retreated 22.5 to 3,502.4. Gilt-edged stocks eased by pounds 1 8 (Graph omitted)