Market Report: Blue chips stage a modest revival

ALTHOUGH BLUE chips perked up, the rest of the stock market remained depressed. Footsie ended 14 points higher at 5,729.7 but the mid and small cap indices again suffered sharp reverses.

Even the blue chip rally looked fragile. Much to many observers' surprise Footsie quickly threw off the inhibitions of New York's overnight slump and by lunchtime was 38.3 ahead. But with New York looking uncertain in the afternoon the market became cautious, even hesitant.

Still even such a modest revival created satisfaction. Footsie had been in ragged retreat for five trading days, creating anxiety that the long bull run could have ended. The recovery was not just the result of "bottom fishing". Investors appeared to be hunting for what could be regarded as the equity equivalent of bonds, with some Footsie constituents in demand.

BG, up 11p at 323p was one beneficiary; BT with an 18.5p gain to 672p was another.

Some of the insurers drew strength, with GRE 10.5p higher at 362.5p as ABN Amro and HSBC displayed their support. Last week Cazenove reduced its profit expectations but remained positive.

Brewers were helped by the confident Whitbread trading statement. Bass frothed 18p to 1,085p and Scottish & Newcastle 14p to 850p. Whitbread gained 15p to 1,015p.

Banks were mixed. Barclays fell 8p to 1,677p despite SBC Warburg signalling a 2,200p target and CSFB shooting for 2,500p. Halifax, lifting mortgage and interest rates, gained 4p to 801p. HSBC and Standard Chartered reflected the firmer Hong Kong market.

British Petroleum, showing analysts its operations in Alaska, hardened 5p to 863p.

Nycomed Amersham, the health group, was another on the analytical bandwagon. The shares advanced 12.5p (after 25p) to 417.25p as details filtered through of a confident investment presentation in Sweden.

Others enjoying analyst support included Great Universal Stores, up 3.5p to 874.5p with Warburg suggesting a 950p price, and Reed International, up 4.5p to 544p, as Panmure Gordon made bullish noises.

BTR firmed 1.5p to 177p; Schroders indicated it may trim its profit forecast following a meeting with the company. Smiths Industries, up 28p to 840p, was helped by rumoured BT Alex.Brown support.

Tate & Lyle seemed to benefit from talks between a US group and analysts. The shares rose 7p to 502p on suggestions the American message indicated trading should be improving for the sugar group.

Next, on its way out of Footsie, fell 21p to 523.5p and Allied Domecq continued to reflect the lack of any developments on its spirits front, falling 8p to 583p.

The mid cap index fell 46.5 points to 5,703.5 and the small cap was off 22.2 at 2,708.6. JJB Sports led the mid caps, up 22.5p to 587.5p on hopes that England's win will lead to increased sales of sports goods. But Premier Farnell fell 14.1 per cent to 313.5p following a profits warning and Securicor lost 30p to 441.5p on its figures.

London Forfaiting, providing finance for international trade, tumbled 27.5p to 31 7.5p. The group is thought to have been hit by the upheaval in the Far East and there is talk of a profits warning. Two stockbrokers were said to be offering lines of stock. Last year the company made pounds 38.5m. The shares have fallen from around 475p since March.

Insurance broker Oriel edged forward 4.5p to 107p as Oman National Holdings made a 112p cash offer but bid speculation faded at struggling engineer Powerscreen, off 22p to 99.5p. Insurance group Bradstock slumped 10p to 45p after a sharp profits fall.

Stanford Rook, the drugs group, lost much of Monday's gain, falling 12p to 87.5p. Huntingdon Life Sciences, the testing agency which was hit last year by allegations of cruelty to animals in its laboratories, crashed 15p to 18.5p. There was talk of a large line of shares on offer. One suggestion was that as much as 15 per cent of the capital was being hawked around. PDFM has 18.99 per cent and Robert Fleming 15.05 per cent. Animal rights activists recently threatened to embarrass fund managers supporting Huntingdon.

Regal Hotels fell 1.5p to 41.5p after taking a pounds 1m "significant" equity stake in The Restaurant Partnership, running the Simply Nico and Nico Central brands.

Slug & Lettuce, which must be the ugliest company name on the market, appeared for the first time. It is the new name for Grosvenor Inns. Still the new title, which reflects the brand name of the group's pubs chain, was good for the shares, up 8p to 301.5p, a peak.

City Gourmet, reversed into controversial Lanica Trust, made a poor start. Against a 100p flotation the shares tumbled to 78.5p with, it appeared, former Lanica shareholders eager to exit. The company's main activity is running coffee bars.

The Falkland flyers were airborne again. Desire Petroleum and friends romped ahead, prompting some observers to cry "ramp". Shares of Desire, seeking oil and gas off the Falkland Islands, rose 53.5p to 317.5p, dragging Westmount 20p higher to 180p and Greenwich Resources 3p to 29.75p.

DAWSON HOLDINGS, one of the 10 founders of the Alternative Investment Market in 1995, was unchanged at 176p against a 225p high. The shares have been as low as 49p. Dawson is now worth pounds 105m against pounds 25m at the time of the AIM launch. The newspaper and magazine distributor, which has one of the largest libraries in the world, has applied for a full share listing and hopes to arrive on the main market tomorrow.

AMBERLEY, a chemical group which has evolved from a damp-proofing business, is set for sharp profits progress, suggest stockbroker Sutherlands. It expects to see the group report pounds 7.3m this year (against pounds 6.1m) and then pounds 8.3m. "The ambitions of the management to take a quantum leap on the acquisition trail should not be underestimated," says the broker. The shares held at 109.5p, not far from their peak.