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Market Report: Body Shop faces relegation from the second division

Body Shop International, the environmentally friendly cosmetics creation of Gordon and Anita Roddick, is finding the stock market climate increasingly difficult.

Its shares fell 2.5p to 168p which would indicate it faces the indignity of being drummed out of the supporting Footsie index, the FTSE 250.

Such a fate would be a wounding blow to a high profile retailer which, although it has worn its heart on its sleeve, is clearly bewildered by its failure to attract a strong City following.

With Footsie and 250 changes due to be announced next month, the market's tracker funds are preparing for the expected changes. If Body Shop's fate is sealed the shares are likely to come under pressure before, possibly, rallying on hopes of re-admission.

The Roddick's company is not the only one in danger of relegation to a wilderness area which, in football speak, is not far removed from the Vauxhall Conference.

The gyrations since September's review would also indicate that Courts, the furnishing chain, and the Wolverhampton & Dudley Breweries must face life outside the 250 index.

Among those set for inclusion are up-up and-away Jarvis, the construction and railway maintenance group, and Admiral, a computer group. Jarvis, down 5p to 317.5p was 4.75p two years ago. Admiral, 71.5p in 1993, rose 5p to 635p.

The blue-chip Footsie index is also scheduled for a series of changes, including the recruitment of Nycomed Amersham, up 27.5p to 2,222.5p.

The rest of the market had a lacklustre session with Footsie off 13.1 points to 4,793.7 in uneventful trading.

British Steel inflated trading volume by, for unexplained reasons, rebooking through Cazenove a 93 million July deal at 155p; the shares fell 2.5p to 147.5p.

There was also a setback for British Aerospace, off 25p at 1,660p. As the Government continues to dilly and dally about lifting the foreign ceiling, BAe revealed overseas interests now accounted for 29.39 per cent of its capital.

BAe and Rolls-Royce are forced to limit foreign shareholdings to 29.5 per cent. They have made frequent representations for the ceiling to be lifted and when Labour swept to power it was assumed the limit would quickly be increased to, say, 49.5 per cent. But so far a deafening Whitehall silence. If BAe's overseas fan club continues to grow and breaks through 29.5 per cent it will be forced to demand the last foreign arrivals sell their shares, possibly at a loss.

Rolls-Royce ended 5p higher at 219p.

Allied Domecq, on its surprise dividend increase, led the Footsie leader board, scoring a 27p gain to 508p.

Vague stirrings that Asda and Safeway could have revisited their superstores alliance were evident. Asda rose 2.5p to 160.5p and Safeway 15.5p to 395p. Goldman Sachs is keen on the sector.

BTG, the former British Technology Group, rose 24.5p to 667p on Dresdner Kleinwort Benson interest and Merrill Lynch gave FirstBus, winner of the Bristol Airport auction, a whirl, lifting the shares 6.5p to 211.5p.

Menvier-Swain, the electrical equipment group, surged 49p to 254p as a possible takeover was disclosed. Bluebird, the toys group, held at 102p with Guinness Peat, a persistent buyer of underperforming shares, picking up a further 540,000 shares, increasing its interest to nearly 10.5 per cent.

Engineer Spirax-Sarco dropped 13.5p to 651.5p as SBC Warburg turned negative and DKB hit housebuilders, calling most lower with, for example Barratt Developments, down 2.5p to 256p. Hanover International, the hotel chain, held at 124.5p. Chairman Peter Eyles acquired 4,000 shares at 124p and now has 0.64 per cent. His buy seems to dash bid hopes. In August Mr Eyles said Hanover had received an approach which had not led to an offer.

Loftus Road, taking in the Queens Park Rangers football club, rose 2p to 34.5p on managerial sackings. The shares touched 106.5p at the turn of the year. Like most football clubs they have found the market a difficult pitch since being floated at 72p a year ago.