Market Report: Blue chips end April Fool's day on a dull note

BLUE CHIPS hit a record high but ended April Fool's day on a humourless note. After surging 103.8 points to a new 6,399.1 trading peak, Footsie ran out of enthusiasm and failed even to achieve a closing record. The final calculation was up 34.7 at 6,330, just 5.7 from the high reached last month.

The stock market stalled when New York, again demonstrating its awesome power over London, opened on a hesitant note. There are fears that, with the Balkan crisis intensifying, the world's largest market could be in for an uncertain run.

But until New York's subdued display equities boomed as the market was captivated by lower interest rates hopes and gleeful anticipation of more mega deals.

The rush into Personal Equity Plans and jockeying ahead of the end of the tax year were decisive influences as share volume once again nudged 1.2 billion. It was again a day for blue chip chasing, with mid cap shares left in the cold, although the small caps managed moderate headway.

The market has this year experienced the wall of money argument as cash rich institutions have piled in and private investors have scrambled to buy PEPs; it is estimated that PEP business in February and March was up 63 per cent on the same months last year.

BP Amoco kept the merger pot boiling when it duly rolled out its take over of Atlantic Richfield, which will make institutional investors even more under weight in the stock. The claim by the Ing investment house in New York that the shares were overvalued took the shine off the price; it fell 39p to 1,009.5p.

Banks and drugs captured the bid imagination. Persistent rumours again swirled of a major banking deal; Barclays soared 77p (after 104p) to 1,858p and Halifax rose 27p to 786.5p. Bank of Scotland, possibly the favourite for bid attention, gained 44.5p to 867.5p, and National Westminster Bank added 35p to 1,463p.

Drugs saw Glaxo Wellcome 82p higher and Zeneca 109p up at 3,037p. There was a yarn that Glaxo intended to barge into the merger between Astra of Sweden and Zeneca. But the drugs giant appeared to have left any intervention too late.

Next week AstraZeneca makes its debut and the heavy buying may have been fuelled by institutional shareholders establishing their positions before the deal is concluded. Glaxo is more likely to try to resurrect deals with either Bristol Myers Squibb or SmithKline Beecham.

Supermarket chain Safeway was at one time 8.75p higher as bid stories resurfaced. The shares ended 5p harder at 247.25p.

The re-appearance of legendary deal maker Michael Ashcroft with a takeover bid for troubled Corporate Services enlivened the undercard. His Carlisle vehicle is merging with his US operation and bidding in cash and shares up to pounds 282m for troubled Corporate Services, 21p higher at 94.5p.

Hall Engineering rose 14.5p to 155p as the management buy-out came in at 155p a share. Rival bidder, the TT conglomerate, is pondering whether to top the managers' offer.

Take over chatter edged Cox Insurance 2.5p higher at 165p and engineer Alumasc 13.5p to 105p.

But the latest Pilkington bid story was shattered. Saint Gobain, the French group, denied the bid rumour and once again Pilks shares cracked, down 6p to 76.5p with accusations going the rounds that old-fashioned ramp had been cleverly executed.

EMI, the showbiz group, was on key with a 17.25p gain to 459.5p. Stockbroker Sutherlands regard the shares as a hit after talking to the company.

Telecoms were back in demand. Vodafone dialled a 31p gain to 1,182p ahead of quarterly mobile phone figures and BT's decision to cut mobile call charges; BT gained 17p to 1,028p. Securicor, still reflecting hopes BT will take full control of the Cellnet mobile phone group, gained 22.5p to 568p. Colt Telecom rose 32p to 1,148p and Telewest Communications, encouraged by positive comments from Morgan Stanley, firmed 8.5p to 277.25p.

Railtrack remained under the whip of regulatory worries, giving up 54p at 1,368p. Diageo, off 20p to 676p, was ruffled by fears that LVMH, the French luxury goods group battling for control of the Gucci fashion business, may sell its remaining 6.6 per cent stake

Cable & Wireless was another under pressure, losing 22p to 752p. It is suing the American group MCI, following their Internet deal and there is continuing speculation that the Chinese government wants to offload its 13 per cent interest in Cable-controlled Hong Kong Telecom.

Scotia, the drugs group, softened to 101.5p. Founder and former chairman David Horrobin is thought to have further reduced his 11 per cent stake. Perpetual seems to have been the buyer, lifting its interest to 11.3 per cent.

Acorn, the computer group, logged a 17.5p gain to 217.5p. It raised eyebrows by moving its 24.4 per cent stake in Arm, the chip maker, to its Applied Risc Technologies off-shoot. The group wants to cash in its Arm shareholding, possibly distributing the shares to its shareholders, but has been inhibited by tax problems. Acorn said the switch did not imply any deal was imminent.

Arm rose 35p to 2,735p; the shares arrived at around 800p a year ago. The Arm stake is worth pounds 315m, which compares with Acorn's capitalisation of less than pounds 200m.

Bernard Matthews, the meat group, held at 129p with Investec Henderson Crosthwaite saying the shares offered good value.

Stockbroker Raphael Zorn Hemsley fell 25p to 67.5p following a surprise profit warning. The shares were 137.5p last year. The insurance specialist blamed a "poor market" in recent months. Blick, an electronics group which produced a profit warning on Wednesday, fell a further 62.5p to 197.5p; the shares touched 457.5p last year.

Save, the hard-pressed petrol retailer, firmed 4p to 39p with indications the industry giants are increasing their forecourt prices fuelling the gain.

Dentmaster, which specialises in knocking dents out of car bodies, held at 5p. It raised around pounds 57,500 placing shares at 4.25p The cash will be used to fund US expansion.

SEAQ VOLUME: 1.2bn

SEAQ TRADES: 111,338

VFG, the video and film facilities group capitalised at pounds 12.6m, is planning to expand in Europe and Australia.

It is raising pounds 10m, placing shares at 50p each; the price shaded 1.5p to 52p. As part of the revamp David Hudd, formerly of Vardon, becomes chairman.

The group, which hopes its overseas expansion will produce a more even profits flow between the two half years, has achieved profits of pounds 1.18m, up 30 per cent.

AEA TECHNOLOGY, the privatised engineering services group, has had a torrid week with its shares, following a profits warning, slumping from 617.5p to 343.5p. They were 1,029p last summer.

There are signs the fall has been too steep. Investec Henderson Crosthwaite is one house believing the decline has been over done and WestLB Panmure say the shares should be 450p. Director buying helped the price up 2.5p to 346p yesterday.