Market Report: Blue Circle sees light at the end of the tunnel

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The Independent Online
A SOLID performance by Blue Circle Industries provided a useful brake for the FT-SE 100 share index, which beat a hasty retreat in late dealings as Wall Street opened weaker.

BCI rose steadily throughout the session as it was anticipated - and then confirmed - that Ebbsfleet in north Kent would be chosen as the site for the Channel Tunnel rail link. Shares closed 12p higher at 322p.

The company owns 2,500 acres of land in the area, and is involved with London and Continental, one of four on the short- list of consortia bidding to build the pounds 2.7bn link. National Express, another member of the BCI camp, added 3p to 334p.

Some of the companies in the other consortia fared less well. They included National Westminster, unchanged at 497p, Seeboard, down 1p to 451p, and BICC, the cables maker, which lost 4p to 410p.

GEC also turned in a flat performance, closing the day where it started at 308p. Market sentiment had more to do with speculation about a possible takeover bid for British Aerospace than about its participation in the rail link bidding.

BAe spurted 20p to 504p. Analysts are becoming more convinced that a bid from the cash- rich GEC is inevitable, given the consolidation taking place in the US defence industry.

The consensus of opinion is that this week's dollars 10bn ( pounds 6.7bn) merger between Lockheed and Martin Marietta, the second- and third-biggest defence contractors in the US, will force European operators to join forces.

It has been an open secret for years that GEC would love to take over BAe. However, BAe stated publicly this year that it was not interested in merging.

The shock waves from the Lockheed-Martin blockbuster unsettled Smiths Industries, which lost 8p to 459p, and VSEL, which dipped 7p to 933p.

British Steel was one of the few leading shares to hold on to early gains. Shares closed 2p better at 162p, a level they reached on news of a possible amalgamation of its large diameter welded pipe business in a joint venture with two German companies.

Many other blue chips recorded falls and the FT-SE 100 index finished just 1.7 points higher at 3,251.3.

The day's trading was influenced strongly by Wall Street. An overnight breach of the 3,900- level by the Dow Jones drove the FT-SE 100 up by 15 points in the morning.

That was followed by a weaker opening on Wall Street, which sent the index scuttling back in late afternoon dealings.

Other adverse influences on the leaders included BZW turning negative on Coats Viyella, down 10p to 229p, and James Capel putting Argyll Group, off 11.5p to 295p, on the sell list.

A 10p fall to 785p greeted Reed International's confirmation that it was looking to buy part of Ziff, the US magazine publisher.

Two of the big telecommunications constituents were out of favour as BT announced a 25 per cent cut in charges for international calls.

BT eased 0.5p to 390.5p, with analysts having already discounted price cuts by the market leader, although the move hit Cable & Wireless, owner of Mercury. C&W lost 6p to 467p.

Conversely, growth in the use of mobile phones continued to draw investors to Vodafone Group, up 5.5p to 209.5p, and to Securicor, which saw its ordinary shares rise 85p to pounds 15.35 and 'A' shares by 50p to pounds 10.59.

Trading in second-line stocks was dominated by the start of the results season.

Notable gainers among those reporting included Domnick Hunter, up 10p to 260p, Portco, ahead 13p to 246p, Psion 11p higher at 285p, and Provident Financial, which advanced 18p to 541p.

Ladbroke firmed 1p to 168p ahead of today's results, and possible news about its push to return to the London casinos business.

Lonrho improved 6.5p to 142.5p amid speculation that Tiny Rowland's reign at the company would be ended at today's annual meeting.

Power games continue at Bristol Scott, the loss-making property and leisure group. Less than two weeks after the ousting of Anthony Kerman as chairman, Nicholas Berry has boosted his holding from 14 to 19 per cent with the purchase of 398,000 shares at 155p. There is also talk that negotiations are under way to buy out the Kerman family's 33 per cent stake. Shares rose 5p to 163p.

Aran Energy's climb continued, with the shares rising 1.5p, a year's high of 39.5p and a 66 per cent advance over the summer. More than 1 million shares were traded yesterday in the Irish oil minnow. The main talking point is that the company may soon announce good news about its drilling venture with Amerada Hess in the Shetlands area, close to where BP recently found oil.

Coutts Consulting, the outplacement group headed by the former Midland Bank chairman Sir Kit McMahon, shocked the market with a profit warning. Shares initially dived 29p to 60p and closed at 67p, a low for this year. It announced a swing from interim losses of pounds 5.3m to a positive pounds 341,000 before tax, but said full year operating profits would be below expectations.

Leading equities just managed to remain in positive territory yesterday after a weaker opening on Wall Street eroded gains made in early morning trading in London. The FT-SE 100 index, up 15.3 points at one stage, closed 1.7 higher at 3,251.3.

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