Market Report: BT campaign sets the tone - and the pace

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THE telephone giants BT and Cable and Wireless rang the stock market bell yesterday.

BT rose 14.5p to 427.5p, a 20.5p advance, worth more than pounds 1.2bn, since the campaign to float the Government's remaining 22 per cent interest was launched by the merchant banker SG Warburg on Monday.

The share advance could reflect buying by some institutions wishing to improve their position in the flotation.

C&W rose 25p to 749p, partly reflecting the BT excitement. In the past two BT share sales C&W has performed well and many expect it will do so during the BT3 flotation.

But C&W has its own story to tell. Tomorrow its important Hongkong Telecom offshoot is due to report annual results. NatWest Securities expects a 14 per cent profit increase. C&W has 57.5 per cent of the Hong Kong group, which should be a significant beneficiary of the improving political climate between the colony and China.

Its determination to increase its international operations is also winning City support. C&W wants to take a 25 per cent interest in the Irish telephone network and is looking to involve itself in Greece, Egypt and Malaysia.

The group is due to report its figures to the year ended March next month - just ahead of the BT price fixing. Patrick Wellington at NatWest expects a pounds 156m improvement to pounds 800m, with pounds 1,055m likely this year.

With the sale of a 20 per cent interest in its Mercury telephone network to Bell of Canada pulling in pounds 480m, C&W is seen as one group with adeqaute funds for its needs.

Courtaulds, the chemicals group reporting today, ruffled sentiment as the story went around that it would accompany its results with a cash call. Some suggested as much as pounds 500m. The shares were at one time down 9p. But with Smith New Court apparently on the buy tack they closed 9p higher at 522p. Courtaulds refused to comment. Martin Evans at Hoare Govett said a cash call was 'not impossible'. The chemicals group is expected to produce profits down from pounds 201.4m to pounds 190m.

Water shares, after a firm opening, took a late bath as rumours circulated that shareholders could be tapped for cash during the results season that starts today.

The rest of the stock market enjoyed a late rally, with US investors making their presence felt. But BT, C&W and Thorn EMI, up 26p to 856p on its figures, were responsible for much of the FT-SE 100 index gain of 12.1 points.

Royal Bank of Scotland put on 5p to 287p as Carr Kitcat & Aitken made positive noises. A combination of a recovery in the group's banking business and the success of its Direct Line insurance operation has prompted Derek Chambers, an analyst, to forecast profits of pounds 210m for the year to September. Last year it made only pounds 21m.

TSB Group, despite sell advice from Shaw & Co, managed a 1p gain to 186p as takeover hopes got the upper hand.

Unilever recovered some of its buoyancy, rallying 17p to 1,028p. Carl Short at Nomura said the recent worries, which had driven the shares down from 1,104p, were misplaced. The shares 'look outstandingly attractive'.

Zeneca, still in the grey market, was a beneficiary of the late rally. The shares put on 8p to 630p and the nil paid 6p to 36p.

There has been little institutional interest during the unofficial dealings. But interest is expected to grow once offical dealings get under way next week.

The failure of Speyhawk sent a shudder of apprehension through part of the property sector. But the leaders remained firm.

UK Land had another eventful run. In belated reaction to the company's comment that it could not explain the recent share advance the price dropped 8p to 29p. But by the close the fall had been trimmed to 3p.

Trafalgar House, where Hongkong Land now has effective control, enjoyed a sudden spurt. The ordinary shares closed 10p higher at 109p and the 'A' shares improved 10.5p to 109p. A rumoured bullish note from UBS did the trick.

Royal Insurance was ruffled by stories it will be forced to increase its stake in the Epic insurance consortium. It seems the Italian Fondiaria group wants to sell its interest to one of its partners. The shares closed 2p lower at 286p.

The management consultancy Alexander Proudfoot fell 11p to 83p on a rumoured downgrading from SNC.

Ptarmigan Holdings, the ill-starred mini-conglomerate, re-emerged in the shape of Graystone at 9.5p after touching 11p. At one time largely a food and hotel business, the group is developing as a specialist engineer. The shares were suspended last month while the pounds 9m takeover of Cableform was put together.

Aminex, the little oil group, continued to move ahead, reaching 17.75p, up 2.75p, as it confirmed that East West Oil had lifted its interest to 25.2 per cent.

Headline Book was suspended at 290p. It said it was near to completing a substantial acquisition.

THE FT-SE 100 index rose 12.1 points to 2,837.7 and the FT-SE 250 index reached another peak, up 4.3 at 3,172.7. Turnover was 591.2 million shares with 27.691 bargains recorded. The account ends on 4 June with settlement on 14 June. Government stocks were little changed.

INVERGORDON Distilllers jumped 25p to 297p as buyers moved in as the market closed. Some think American Brands, with 41.3 per cent, is about to pounce. Others point to the indicated pounds 100m bid for the unquoted North British Distillery, a grain whisky producer. The move is seen as indicating higher grain prices, which would comfort Invergordon, owner of Scotland's largest grain distillery.

WAVERLEY Mining, an investment trust with most of its assets in Australian and US mining shares, encountered selling, falling 2.5p to 23.5p. The shares were only 13p in December. They have climbed as gold shares have attracted attention. The market estimates that asset value has risen from 25p to nearer 60p, based on a valuation of its top 10 investments, which represent 67 per cent of assets.