MARKET REPORT : Bold buyers rout market-makers and help to turn the tide

The FT-SE 100 index closed 12.4 points lower at 3,025.3 and the FT-SE 250 index shed 23.1 to 3,384.3. Turnover was low, just 465 million shares with 21, 399 bargains. Government stocks were firm.
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Shares, to the astonishment of many, shrugged off the Barings' disaster. When the traditional, knee-jerk mark-down encouraged a few buyers the crisis, as far as the stock market was concerned, was over.

The FT-SE 100 index, hammered down nearly 40 points at the opening, ended with an inconspicuous 12.4 fall at 3,025.3 - a far cry from the weekend predictions of a share slump. Why, then, did the crash fail to materialise?

Those brave, early buyers had a much bigger impact than they probably realised.

They forced market-makers to appreciate that bargain-hunters were still alive and well. But many other currents came into play.

It was, of course, an uphill struggle for the market. A little overseas buying was a steadying influence; so was New York's dismissive response to the latest derivatives debacle.

But it was the quick realisation that the Baring collapse should not be systemic that dictated the market's reaction. Losses in London are unlikely to be ruinous - some suggest no more than £100m - with Singapore carrying the main force of the fall-out.

Indications that all, or at least most, of the traumatic Nikkei futures contracts had been sold, thereby capping the bankrupt bank's exposure, was another unconfirmed straw of encouragement.

A steadier performance by sterling, which encouraged government stocks, and hopes the Government will survive tomorrow's crucial Euro vote were the more mundane factors to help what is a far-from-strong market to shrug off what had seemed to be a devastating hammer blow.

Financials, not surprisingly, took much of the flak. SG Warburg, which has encountered an array of setbacks including the aborted merger talks with Morgan Stanley, was at one time down 48p. It closed at 683p, off 35p.

Kleinwort Benson, in its ex-dividend form, fell 42p to 578p and Hambros lost 8p to 225p.

Clearers were more influenced by HSBC's figures.

National Westminster was down 20p to 484p but, again, much of the decline represented a dividend payment. HSBC's results left the shares 6p lower at 660p.

The Government's gencor sell-off has been ruffled by the goings-on in Singapore. But the market's resilience should prevent any serious damage. National Power lost 5p to 470p and PowerGen 5.5p to 507.5p.

Among other financials Mercury Asset Management slipped 24p to 739p and Smith New Court 15p to 427p. The old discount houses suffered; Cater Allen slipped 11p to 427p and Union 5p to 79p.

The main casualties were, not surprisingly, Barings' own securities. The ordinary capital is held by a charitable trust. The few fixed-interest stocks traded were suspended. Two preference shares enjoyed full quotes. Before the suspensions were announced the Baring 8 per cent preference shares crashed from 98p to 50.5p and the 9.75 per cent from 118p to 4.75p.

The rest of the market had difficulty attracting much attention as the Barings bankruptcy was digested.

But properties continued their gentle progress as the market becomes increasingly impressed with the sector's recovery prospects, particularly in office rents. MEPC gained 9p to 405p and Land Securities 6p to 591p.

Saatchi & Saatchi, the hard-pressed advertising group, continued to drift lower, off 5p to 89.5p. WPP, figures today, fell 3p to 103p. The market expects about £90m against £54.4m.

The surprise £337m bid for AAH, the chemist chain, sent the shares surging 122p to 431p and produced the predictable response among rivals. UniChem rose 7p to 253p and Lloyds Chemists 8p to 290p. The bidder for AAH, a German group called Gehe, moved into the market, picking up 1.4 per cent of its target's shares. It now has about 2 per cent.

Fisons, ahead of its signalled reshaping exercise, gained 2p to 127p. But British Biotechnology remained depressed following delays over the development of one of its cancer drugs, falling 11p to 428p.

Insurances continued to benefit from the "orphan" funds split. Britannic was up 7p at 512p and Refuge 13p at 335p.

Airtours, the package holiday group, dipped 2p to 417p as the suspicion grew it is striving to clinch the takeover of the German ITS holiday group.

Lonrho fell 4.5p to 147p following reports about problems in the business empire of chief executive Dieter Bock. BAT Industries remained under the whip of smokers' lawsuits, falling 8.5p to 415.5p.

In the excitement Yorkshire Electricity ended firm, almost recovering a 22p early loss. It closed at 831p in often brisk trading. Some observers expect the long-awaited bid to appear this week. Hanson remains the favourite to pounce.

Hillsdown Holdings, the food group, edged forward 2p to 177p. Figures are due next week and NatWest Securities is backing the shares.

But Williams de Broe, looking for a 7 per cent increase to £173m, believes the shares should be sold.

Food maker Cranswick held at 165p. Charterhouse Tilney has increased its profit forecast. It suggests the group should have made £2.75m this year (against £2.33m) and hit £2.9m next.

Pentos, the book retailer, fell from 8p to 4.5p before suspension as talks continued with its bankers. But Beverley, an engineer, returned to market at 1.5p from a 6.5p suspension price. The group has been rescued by a reorganisation.

Figures lifted Essex Furniture 9p to 128p and Go-Ahead, the bus group, 5p to 188p.

Spring Ram firmed 1p to 40p. Results are due today and a return to profits is expected. NatWest is looking for £4.2m against a £36.4m loss. The group has been reshaped by new management.