Market Report: Buying in US spurs Saatchi against trend

AMERICAN investors were encouraged to bank on Saatchi & Saatchi, the once high-flying advertising agency yesterday.

Two US investment houses, Donald Lufkin & Jennette and Smith Barney, were said to be seeking ADRs with a New York lunchtime investment presentation hosted by Smith going down well with fund managers. SG Warburg is due to meet US investors today.

The interest followed the group's move back into the black. On Tuesday, it disclosed interim profits of pounds 11.1m against a pounds 32m loss. About pounds 20m is likely for the year, with pounds 35m expected next year.

The New York action was enough to spark renewed activity in London with the shares climbing 14p to 150p.

The reawakening at Saatchi occurred as the stock market suffered another demoralising session. An early attempt at a rally soon petered out, and when at least two securities houses took evasive action in the futures market towards the close the FT-SE sank back into negative territory, ending 6.5 points down at 2,303.1.

The index, started in January 1984, has fallen for the past seven days - the first time since 1985 it has suffered such a succession of reverses. The seven-day retreat has wiped out 117.1 points. The all-time low was reached in July 1984 when it touched 986.9.

The market remains weighed down by economic and interest rate worries. Indications of more tension in the Gulf and a story Norman Lamont had tendered his resignation as Chancellor of the Exchequer merely added to the temptation for most investors to stay on the sidelines.

But a few ventured forth. Water shares, weak lately, spurted ahead on the feeling today's Ofwat recommendations will not be as draconian as some fear. Thames Water gained 9p to 394p. Some of the electricals made progress on dividend considerations. And BT advanced 3p to 336p following the Oftel development.

Burmah Castrol took up the running on the oil pitch as Smith New Court said the shares were too cheap and should reach 600p. The price improved 18p to 543p. Enterprise Oil rose 8p to 355p on disposal hopes.

Northern Foods was another attracting attention. The shares have been weak as analysts have downgraded. With SG Warburg repeating its buy recommendation the price rallied 17p to 249p.

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Ranks Hovis McDougall, another hit by downgradings, lost another 2p to 166p. Turnover, swollen by a bed and breakfast deal, almost reached 10 million.

Hoare Govett, pointing out that the dividend is likely to be held, has moved its recommendation from oversold to hold.

Courtaulds Textiles was helped by the Abu Dhabi Investment Authority lifting its stake above 3 per cent. Smith suggested next month's interim profits would be pounds 17.5m against pounds 16.4m and put forward the shares, up 3p at 400p, as a buy.

Boots was at one time 14p up at 436p as it announced its Manoplax heart drug had won UK approval. The shares ended at 429p.

Standard Chartered, the banking group, made a bright start as some detected Far Eastern buying. However, rumours of stake-building quickly lost their appeal, although the shares managed to hold much of their gain, closing up 8p at 398p.

BAA was another to buck the trend. The 11 per cent increase in July passengers at its UK airports pushed the shares 4p higher to 633p.

Grand Metropolitan felt the impact of the Terry Smith affair, falling 10p to 415p. HP Bulmer put on 7p at 332p on the Kleinwort Benson recommendation.

Queens Moat Houses tumbled 8p to 57p following its interim results. Forte lost 7p to 130p in sympathy.

Cullens Holdings, the convenience stores group, was singled out for attention among food retailers. The shares slumped 7p to 25p. Mike Chambers, development director, said he knew of no reason for the collapse and 'trading has been extremely successful in recent months'. The increased SHV stake added 3p to Nurdin & Peacock at 151p.

Kingston Oil and Gas was another in sharp retreat - down 23p at one time, and closing 14p lower at 49p. A badly-executed sell order was blamed.

Eurocamp, weak recently following director sales, recovered 11p to 286p. Williams De Broe said buy. The group, which provides self-drive continental camping holidays, is expected to increase profits this year from pounds 6.9m to pounds 9.1m.

Welpac, the loss-making hardware distributor where new management has taken control, jumped from 20p to 58p. But it was an illusion; the result of a share consolidation.

Shares were again in the doldrums. The FT-SE index failed to retain early enthusiasm and a 17.1- point gain was transformed into a 6.5 fall to 2,303.1. The FT 30-share index was down 8.2 points at 1,715.3. Volume was slack - turnover just topped 400 million shares with only 16,408 bargains. Gilts fell by up to half a point

Shares of Suter, the mini-conglomerate headed by David Abell, rose 7p to 95p. The Birmingham stockbroker Harris Allday Lea & Brooks has chopped pounds 1m off its year's profit forecast to pounds 19.5m but says the shares do not 'reflect the underlying value of the businesses' and are a buy. Last year Suter made pounds 17.8m. Harris Allday is the company's broker.

GM Firth, the steel stockholder, seems no nearer selling its 23 per cent stake in the steel group Arthur Lee. As Lee sold a property for just over pounds 2m against a pounds 106,829 book value, Michael Wilkinson, head of Firth, was provoked into saying that Lee had more hidden riches. With Lee's shares up 3p at 68p it is priced at pounds 22m. It should be pounds 50m, Mr Wilkinson said.