Market report: CMG surges ahead as the hi-tech romp continues

COMPUTER services group CMG charged to a new high as Morgan Stanley alighted on the shares.

The price surged 165p to 1,905p with the American investment house suggesting it will go to 2,500p.

IT shares have enjoyed a remarkable romp since FTSE International, which controls the City indices, decided to introduce a computer sector at the start of the year.

Shares of CMG, one of the more reticent hi-tech companies, have joined in the fun, nearly trebling. They are now on a spectacular rating. Stockbroker Granville expects profits of pounds 47.3m. Last year the group hit pounds 38.6m.

The rest of the stock market put on a resilient display with Footsie improving 56.1 points to 5,898.4. The supporting indices also made headway.

A firm New York opening and expectations that the Monetary Policy Committee will peg interest rates were behind the most robust blue chip performance for more than three weeks.

Royal & Sun Alliance suffered the expected correction, off 45p to 655p, as Tuesday's rogue order driven trade was rubbed out.

Among the best performing leaders were BAT Industries, up 28.5p to 581.5p on Swiss buying, often a sign that corporate activity is in the wind, and Railtrack, back on the main line with a 41p gain (after 95p) on its results and its involvement in the high speed rail link between London and the Channel Tunnel.

Courtaulds, the chemical group, fell 21.5p to 444p as the American PPG Industries decided not to bid, leaving the way clear for Akzo Nobel, the Dutch group which has made a 450p cash offer.

MFI Furniture, the struggling retailer, was back in the takeover frame with Ikea, the Swedish group, punted as a possible predator. The shares rose 5.5p to 87.5p in brisk trading. Before trading prospects deteriorated the shares were riding at 160p.

Storehouse, ahead of an investment dinner at London's Savoy Hotel, hosted by Henderson Crosthwaite, shaded 1.5p to 274.5p.

Queens Moat Houses, the hotel chain which once teetered on the brink of collapse, softened 0.5p to 35.5p as Salomon Smith Barney, the US securities group, emerged as a 14.63 per cent shareholder. SSB, which presumably picked up most of the shares sold by Banque Nationale de Paris Suisse on behalf of mystery Swiss investors, already held just under 3 per cent.

Asda was helped 7p higher to 188.5p on Dresdner Kleinwort Benson support, and Vodafone jumped 26.5p to 739.5p as analysts upgraded following Tuesday's results.

An analysts' visit left builders merchant Graham a shade firmer at 187.5p and JJB Sports enjoyed a tip sheet's attention, gaining 30p (after 55.5p) to 590p.

Game, the computer games retailer, was another to fail to hang on to its best level. Placed at 200p, the shares hit 255p before settling at 230p.

Booker, selling its controlling stake in Agatha Christie, to Chorion, rose 21p to 269.5p. Chorion, the old Trocadero, hardened 2p to 25.25p.

Drug shares were unruffled by indications of tougher government price controls; Glaxo Wellcome rose 47p to 1,683p. Reports that generators may be forced to sell some plants clipped National Power but PowerGen gained 10.5p to 789.5p. Builders were helped by positive comments from DKB and Merrill Lynch.

Trading warnings made predictable impacts. Future Integrated Telephony fell 15.5p to 36p after forecasting a "substantial" loss. Kevin Clarke quit as managing director.

Theo Fennell lost 7p to 57.5p; the luxury goods group said year's figures would be hit by overseas expansion.

Tandem, the cycle maker, hardened 0.25p to 8.75p as a shareholders' revolt emerged. Investors with 16.2 per cent want to replace three directors with members of their consortium. The idea, it appears, is to pump a racecourse business run by consortium member John Sanderson into Tandem. Mr Sanderson's company manages the Catterick, Doncaster and Redcar courses. Loss-making Tandem's peak was 20.5p, hit two years ago.

Galen, the health group which came to market in July, fell 30p to 415p. The shares have been weak lately. Finance director Geoffrey Elliott said he doubted if there had been a leak of the profit announcement due later this month. Any leak "wouldn't provoke a sale", he said.

The fall, he said, was caused by selling by small shareholders. "There is no institutional selling," he maintained. The shares were placed at 150p; they peaked at 527.5p.

Packaging group MY Holdings firmed to 82.5p as stockbroker Albert E Sharp said a re-rating was overdue. It expects a modest profits advance to pounds 14.55m this year.