Market Report: Enterprise raid reinforces hopes that tide has turned

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The Independent Online
THE stock market enjoyed its busiest day for weeks and the FT- SE 100 index jumped 37.3 points to 2,946.3.

Although the sudden Enterprise Oil raid on Lasmo, netting 9.8 per cent of its target, inflated turnover, the long-awaited display of market action in what has become one of the most tedious big takeover bids for some years was taken as yet a further indication that the tide could be turning and the long, hard bear market that has devastated shares could be coming to an end.

With the supporting FT-SE 250 index at last throwing off its shackles and the market prepared to ignore the difficulties created by the third one-day rail strike there was a distinct air of confidence as buyers, institutional and private, re-appeared, if discreetly and modestly.

So far this week Footsie has recovered almost 70 points of the near 150 lost in last week's meltdown.

A bigger-than-expected cut in one of the marginal German interest rates and a successful floating rate pounds 2bn government stocks auction helped overcome initial nervousness. The auction was covered 2.72 times at an average price of pounds 99.76.

With government stocks transforming losses of more than pounds 1/2 into gains of about pounds 3/4 and New York putting on a robust display the scene was set for shares to record their third consecutive plus - the first time such a feat has been achieved for more than three weeks.

The Lasmo raid was, of course, the day's highlight. Enterprise paid 161p and 169p a share, creating a storm of protest from the institutional shareholders who were not approached by the bidder. Enterprise slumped 26p to 382p and Lasmo edged forward 2p to 143p.

Electricities continued to enjoy speculation that regulator Stephen Littlechild would not be as tough as had been anticipated when he first produced his new thoughts on distribution charges.

Good results from Northern Electric highlighted the case for a much more relaxed approach and double-figure gains were once more in evidence. Northern rose 23p to 670p.

The more optimstic tide even enveloped water shares which have been weak. The water companies face their regulatory encounter next month.

Anglian gained 9p to 478p; Severn Trent 17p to 479p and Thames 9p to 447p. Yield considerations also helped the utilities.

Charter, the conglomerate formerly known as Charter Consolidated, surged 51p to 714p, as it mounted a pounds 260m takeover for a Swedish welding equipment group. The deal is accompanied by a pounds 93.3m convertible cash call.

Building material shares turned in a reasonably firm performance. UBS support for Redland, up 5p at 497p, and NatWest Securities backing RMC, 7p higher at 814p, helped the sector. Among builders, Barratt Developments put on 4p to 198p.

Dalgety, the food group, was supported after meetings with analysts, gaining 16p to 417p. James Finlay lost 5p to 75p; it warned that profits from its Kenyan plantations would be down.

The analysts' visit to Grand Metropolitan's food operations continued to inspire the shares, up another 15.5p at 409p. Boots was another to draw further strength from an investment presentation, up 9p to 536p.

Coats Viyella, the textile group, dipped 1.5p to 216p as James Capel moved from hold to sell.

Among insurance brokers Lloyd Thompson slumped 45p to 185p, following a downbeat trading statement.

Properties were in form, helped by yield influences. British Land gained 20p to 389p; Land Securities 14p to 622p.

Arjo Wiggins Appleton, the Anglo-French packaging group, up 10p at 265p, reflected talk of improving prices and volumes.

Harrisons & Crosfield, the conglomerate, advanced 9p to 164p with SG Warburg making positive comments. Hanson gained 3.5p to 247p.

Drugs were firm. Goldman Sachs support for Zeneca lifted the shares 10p to 722p; Wellcome continued to attract attention on US takeover speculation, up 6p to 617p. Chemicals was another firm sector. BOC recovered Tuesday's weakness, up 18p at 701p. Imperial Chemical Industries improved another 16p to 780p.

Eurotunnel was steady at 272p. After the market closed it was announced that Channel tunnel passenger services would not start next month as expected because safety approvals had not been received.

Armour Trust held at 52p. The near 20 per cent threatening shareholding sold by Grand Central Investment, the Malaysian group, has gone to an investment business based in Malaysia. Meanwhile, Armour has increased its car accessories operations by buying Nilco from Unigate. More deals to expand the car accessories business are expected.

It looks as though action looms at Bridgend, the bathroom fittings group which has two hotels. The Co-operative Retirement Benefit Fund, thought to be the vehicle of entrepreneur Duncan Saville, has lifted its stake to 29.8 per cent, by buying another 500,000 shares. Mr. Saville was involved in the Phoenix Timber revamp; the shares are now 15p. Bridgend held at 19.5p.

The FT-SE 100 index rose 37.3 points to 2,946.3 and the FT-SE 250 index 31 to 3,415.2. Turnover reached 764.9 million shares with 20,891 bargains. The account ends on Friday with settlement on 11 July.

(Graph omitted)

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