MARKET REPORT Electricities must play by City rules

The FT-SE 100 index rose 10.7 points to 3,072.7 and the FT-SE 250 index 11.3 to 3,407.1. Share volume was 663.5 million with 24,491 bargains recorded. Government stocks were firm.
The regional electricity companies are coming under increasing pressure to abandon the takeover protection afforded by their 15 per cent shareholding ceilings.

In an unprecedented move a leading City investor, PosTel, is thought to have written to the chairmen of the 12 RECs urging them to propose that the limit be removed.

The move is a clear sign that the institutions expect the electricity companies to play by City takeover rules and comes at a time when the fate of Northern Electric hangs in the balance following the hostile bid from Trafalgar House.

The Government is expected to make known its attitude towards the Northern offer in the next few days. Many in the stock market expect the bid to receive the all-clear.

There had been hopes a statement would be made yesterday. The market got wind of a Whitehall pronouncement but instead of electricity it involved brewing.

Northern, where Swiss Bank Corporation now has 4.7 per cent, rose 4p to 959p; Yorkshire, seen as a likely Hanson candidate, gained 20p to 794p.

Budgens, the struggling supermarket chain, edged forward 3p to 27.5p as intriguing stories of placings and takeover bids drifted around.

Last week the smallest of the quoted supermarketeers disclosed squeezed profits and a fall-out with its biggest shareholder, the Rewe retailing group of Germany.

The bust-up stemmed from Budgens' decision to abandon Rewe's Penny Market concept. The Germans accused Budgens of a "crassly mistaken decision" and short-termism.

It is suggested that Rewe is so fed up it is about to place its 29 per cent share holding although some think it could be provoked into bidding for Budgens. Should Rewe place its holding the market expects another German food discounter, Lidl, to move inon Budgens.

Budgens assets are put at 60p a share. But such a valuation may be too optimistic. Even so it is clear any bid should be pitched comfortably above the market price.

Back in 1987 Budgens shares hit 250p as it attempted to become a leading player in the food retailing business.

Elsewhere it was the beerage under pressure. The surprise announcement that the industry was about to suffer yet another Whitehall investigation produced a brewers' droop.

Bass, the country's biggest brewer, tumbled 20p to 520p; Scottish & Newcastle 12p to 497p and Whitbread 28p to 536p. Allied Domecq, sheltered by its large wine and spirit interests, lost 5p to 515p.

Regionals were also hit; Greene King fell 12p to 508p, Marston Thompson & Evershed 6p to 296.

The rest of the market edged forward but progress lacked conviction. By the close a 24.4 points gain had been cut to 10.7 at 3,072.7.

The prospect of corporate activity continued to hold sway. T&N, the car components group, put on 5p to 162p in brisk trading; Lasmo, another keenly traded share, held at 156p.

Vodafone again attracted attention. The shares have been in demand since last week's surprise profit warning. They rose 4.5p to 198p with US buying triggering the action.

Cable and Wireless held at 396p. It remained silent on talk it is about to pay $555m for a 25 per cent interest in an Indonesian communications group.

Meggitt, an engineer, rose 9.5p to 73p after TT, the aggressive conglomerate, disclosed it had built a 4 per cent stake, prompting talk of an 80p a share offer.

De La Rue, the security printer, jumped 23p to 1,032p in busy trading. The buying seemed to stem from satisfaction over its takeover of Portals, the specialist paper group.

UBS buying was said to have lifted P&O 8p to 578p and Rentokil gained 6p to 223p on rumoured Smith New Court interest.

GKN advanced 13p to 569p as several stockbrokers made encouraging noises.

The performance of Albert Fisher is intriguing. The shares fell 3p to 42p, near their year's low. The food group is thought to have rejected a merger approach from Hobsons, the group which last year acquired the Co-op's food division. Fisher looks a sitting duck for a bid but with a £320m valuation it may be too big a hostile swallow.

Allen, the building and plant hire group, edged ahead 3p to 148p. It continues to trade well with winter building and civil engineering orders topping £20m. Half-time profits were up 114 per cent and Barclays de Zoete Wedd expects the year's figure to reach £6m against £3.1m last time. For next year BZW expects £7.8m. In 1993 the group made £1.5m