Market Report: Banks edge Footsie towards all-time high

ONCE AGAIN Footsie inched towards its all-time high, climbing 85.4 points to 6,108.6. Since peaking at 6,179 in July, the index has made more than half-a-dozen attempts to establish a new top.

But although it managed a trading high last month it has found it impossible to strike a new closing record. Banks, helped along by Barclays, were behind the latest advance.

Barclays rose 102p to 1,692p and National Westminster Bank 97p to 1,379p. Bank of Scotland was 36p higher at 909.5p and Woolwich 17.5p at 365.5p. The stock market latched on to Barclays' increased dividend. With interest rates falling, higher dividend payments are achieving even greater significance than in the past.

There is also the growing possibility of takeover action among the banking community. Last week Lloyds TSB, up 22p to 904.5p, displayed its acquisitive inclinations and although Barclays will, at least for the time being, mark time until new chief executive Michael O'Neill gets his feet under the boardroom table, the group will not ignore future consolidation.

Mergers between clearing and mortgage banks are thought to be the most likely development although more cross border deals are also expected.

Allied Irish Banks is regarded by many as the next bank to fall to a bid, with Lloyds now the favourite to strike. The shares have had a volatile run and rose 30.5p to 1,132.5p in brisk trading.

New York's early strength was a positive influence and there were also vague hopes that perhaps Tokyo's despair is coming to an end.

The banking excitement helped swell trading volume back above 1 billion shares with Centrica, the gas group, the most heavily traded with Seaq putting volume at 24.1 million. Supporting shares were firm. The mid cap index rose 23.7 to 5,200.9 and the small cap 7.5 to 2,248.1.

Cattles, the consumer credit group, underlined the widespread appeal of financials, scoring a 13p gain to a peak of 759.5p. Year's results are due next month. They are expected to come out at around pounds 48m, against the pounds 55.1m achieved in the previous year.

Amvescap, the fund manager, was the best performing Footsie constituent, gaining 44.5p to 607.5p.

Tobacco shares continued to be puffed higher following the Government's decision that the National Health Service cannot sue cigarette makers. Imperial Tobacco swirled 43p higher to 754.5p and Gallaher 21p to 444p. British American Tobacco was up 16.5p to 612.5p in sympathy.

Eurotunnel rose 11p to 84p on rumoured stake building. French financier Vincent Bollore denied he was interested.

Marks & Spencer firmed to 367.5p ahead of an investment presentation tomorrow by the new chief executive, Peter Salisbury. United News & Media, holding City briefings, was flat at 600p.

ScottishPower gained 8p to 602.5p on the appointment of Bill Allan as chief executive of its telecom arm. Goldman Sachs has been appointed to explore the options available to the telecom business. The market expects ScottishPower to go for a flotation.

Rolls-Royce was ruffled by stories of increased competition from General Electric of the US, which is thought to be trying to squeeze the British group's engines out of some Boeing aircraft. The GE rumour overshadowed a pounds 150m engines contract from British Aerospace.

Engineer Haden Maclellan rose 5p to 44.5p, a partial recovery from Monday's profit warning fall. Albert E Sharp and Warburg Dillon Read upgraded the shares to a buy.

Voss Net caught Internet mania, surfing 21.5p higher to 65p, following a supply deal with a charity to provide free Internet access to schools. In the past year the shares have fallen from 160p and three years ago were 413p. The company is raising pounds 125,000 placing shares at 45p.

Charles Stanley, the stockbroker thought to be considering corporate action, was dealt 29p higher at 499p, another peak.

Victory Corporation, a Richard Branson company, held at 6.5p as it settled a near pounds 2m debt owned by Cadoro, the trendy retailer where Mr Branson is a shareholder.

Cadoro now owes the cash to Victory. Because of trading difficulties, the retailer's shares were suspended last month at 0.75p.

Booker, the cash and carry chain, responded to the pounds 23m exceptional charge following the disposal of a wholesaling business by dropping 8.5p to 56p. The shares were 296p last year. Low & Bonar, the packaging group, fell 15p to 165p after losses and a grim trading statement.



GILTS: 114.67 +0.48

STEPHEN DEAN has sold most of his shares in Environmental Property Services.

A 29.6 per cent stake has been picked up at 9.8p a share by investors led by Lupus Associates, where Charles Ryder, formerly of Magellan Industries, is a leading light.

Mr Dean intends to concentrate on builder Artisan (UK), which split from EPS last year.

EPS held at 9.75p and Artisan edged ahead 0.25p to 4.75p.

EXPECT ACQUISITIVE ITG, the AIM-traded Irish telecom and computer group, to disclose another takeover soon, possibly today.

Only last week the company paid pounds 7.65m in cash and shares for Computers in Ireland. Last year ITG, which was started in 1989, put through four takeovers.

The group's shares firmed to 282.5p; they have been as high as 422.5p since arriving on AIM nearly two years ago.