Market Report: Bids - real or imaginary - fail to lift Footsie lethargy

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The Independent Online
BIDS - REAL, imagined and denied - did their best to spur Footsie into action yesterday. But the index had that tired end-of-week look and would not be roused from its Friday sluggishness.

Not even a bright start on Wall Street managed to wake it up. After a brief bounce following the benign set of US unemployment data, Footsie settled down to close 15.8 points up at 5,581.9. The apathy trickled down to the minnows, and both small and mid caps ended lower: the FTSE 250 fell 5.9 to 4750.7, while the small cap finished 3.0 down at 2018.4.

The GEC soap opera was one of the main providers of takeover excitement. The market is fascinated by the defence group's marriage prospects, following its decision to give up its single life. French, American and UK suitors abound, but who is the beautiful and cash-rich GEC going to settle for? All will soon be revealed, and in the meantime the price goes up and up. Yesterday, GEC ended at the top of the Footsie with a 5.8 per cent rise to 534p .

Fellow engineer Rolls-Royce flew 5.25p higher to 232.25p after winning an engine supply deal for 10 new Boeing 717s. British Aerospace, down 4.25p to 495.75p, was grounded after Merrill Lynch turned bearish. The bank fears for the defence giant's contracts in cash-strapped Saudi Arabia.

Among the rest of the Footsie, Shell lost 4.5p to 328.5p in heavy volume. Rumours of a forthcoming profit warning and of hedge-fund selling unnerved the market. BT rang up a 11p gain to 828.5p ahead of a presentation in New York. And British Airways rose 4.25p to 381.25p despite talk of hefty earnings downgrades ahead.

The day's other bid was fictional. Sears, the owner of the Miss Selfridge clothes shops and Freemans catalogue, angrily denied reports that it had received a pounds 460m offer from a venture capital group. This did not stop Sears' shares soaring over 15 per cent to 233p - the biggest rise in the mid-cap. In the stock market's view there is no smoke without fire, and rumours of interest from Alchemy did the rounds.

At last a real bid. Halifax bought NatWest's stake in its car leasing joint venture with Lex, the car hire company, for pounds 162.5m. The market was in no doubt over the deal's winner and losers: Lex soared 32.5p to 425p, Halifax rose 3.5p to 864p, and NatWest lost 28p to 1068p.

Widney provided the small caps with some bid talk. The underperforming engineer, rocked by a boardroom battle last year, said it had received an approach. The prospect of an end to the misery pushed the shares 6p higher to 42.5p.

A failed bid from privately-owned Mansell demolished Lovell, the builder. The shares came back to the list and crumbled 20 per cent to 10p. City Site, a Scottish property group, was also down because a 35p-a-share-offer from contractor Miller looked doomed. The shares fell 5p to 27.5p after City's managing director, who is plotting a management buy-out, refused to sell his stake.

Retailers and leisure groups did not have an enjoyable day. Ladbroke, the betting and hotels group, was Footsie's biggest loser despite winning a casino licence in South Africa. A flurry of options-related selling caused the 11p slump to 235p. The brewer Scottish & Newcastle, results on Tuesday, fell 24p to 746p after Merrill Lynch advised to switch into Diageo, up 13p to 627.5p. Bass, down 12p to 818p, also retreated as dealers cashed in profits for their weekend drinks.

Arcadia once again led the retailers down. The market just cannot forget this week's shock profit warning and sent the Burton and Top Shop group down a further 4.9 per cent to 182p.

Debenhams, Arcadia's offshoot, felt sympathetic and plunged 14p to 333.5p. Morrison Supermarkets, down 11p to 302p and Kingfisher, down 10p to 516.5p, deepened the stores gloom.

No day of trading in these troubled times would be complete without a few profits warnings. Yesterday's biggie came from McBride, down 34p to 121p. The maker of detergents for supermarkets blamed tough markets and competition. Analysts slashed forecast to pounds 29m from pounds 37m.

McBride's woes put a dampener on chemical manufacturers. BTP shed 18.5p to 336.5p, Laporte slid 12.5p to 467.5 and Croda International fell 6p to 236p.

Stoves Group was badly scarred after saying that a lukewarm cooker market will cause a profits slump. The shares burnt off 25.1 per cent of their value to close at 56.5p.

It was a case of game over for SCI, the computer-game maker. The provider of blockbuster games such as Caramageddon and Caropcalypse Now posted a loss of pounds 3.3m and saw the shares go down 18.5 per cent to 44p.

SEAQ VOLUME: 790.0m

SEAQ TRADES: 54,544

GILT INDEX: n/a

FIELD SYSTEMS Design, an electrical contractor, became the latest addition to the junior Ofex market. The Dorking-based company, a management buyout from engineer FKI, ended unchanged at 78p.

Field provides electrical services to utilities such as Severn Trent and Thames Water. It plans to use the float as a springboard for bolt- on acquisitions. Last year it made pounds 400,000 profit.

A FRESH buy for S Daniels, the owner of the New Covent Garden Soup brand. The food producer, flat at 33.5p yesterday, paid pounds 2.4m for Get Fresh, a purveyor of salads, sandwich fillings and dips to delicatessen shops and caterers.

Get Fresh had sales of pounds 390,000 and profits of pounds 152,000 last year. The acquisition will strengthen S Daniels' presence in the chilled food market.

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