Market Report: Footsie fades despite early boost from banks

BANKS BOLSTERED the stock market. At one time Footsie was riding 144 points higher, with the Lloyds TSB figures inspiring the banking sector and encouraging other blue chips to move ahead.

All that was needed to ensure another high performance session was further progress in New York. But, at least during London hours, the Americans failed to oblige.

Footsie reversed into the red, recording an 8.3 fall, before staging a rally, closing at 5,950.7, up 62.2.

Supporting shares stayed in positive territory with the mid cap index edging forward 0.7 to 5,187.7 and the small cap continuing its recovery run with an 11.2 advance to 2,237.

However, if the bankers had not been in such exhilarating form, progress would have been much more muted.

Lloyds kicked off the banking profits season with a much more confident display than at one time seemed likely. It offered clear hints that the market may not to have to wait too long for its next major takeover. The shares, at one time up 83.5p, ended 68p higher at 852.5p.

Barclays, still drawing support from the arrival of new chief executive Michael O'Neill, jumped 96p to 1,516p and Bank of Scotland gained 60.5p to 862.5p.

The banking excitement spread to other financials with Allied Zurich, 62.5p to 911p, and Legal & General, 46p to 876p, in form.

But elsewhere among the Footsie constituents it was a more subdued end to the day with Colt Telecom leading the retreat with a 61p fall to 1,072p.

Scottish & Newcastle, despite Dresdner Kleinwort Benson support, lost 28.5p fall to 676p.

BT continued to reflect its call boom, hitting another peak with a 35p gain to 1,044.5p in busy trading. The shares have come up from 326p three years ago.

IT shares managed moderate headway in the wake of New York's overnight surge. Admiral added 70p to 1,355p but Misys, displaying its US operations to analysts next week, fell 22p to 587p.

Tomkins, the so-called buns-to-guns conglomerate, had a shaky time after a landmark US court ruling found hand-gun makers liable over shootings in New York. Around 25 makers were prosecuted including Tomkins Smith & Wesson off-shoot.

The ruling will almost certainly encourage more court cases, with the gun makers facing legal expenses as well as potential damages payments. The shares, at one time down 16p, ended 4.75p off at 229.75p helped, no doubt, by the group's share buy-back programme which embraced another 500,000 at 228.5p.

British American Tobacco, too, was under negative US influences. The astonishing $51.5m judgement in favour of a cancer sufferer, who sued the Philip Morris tobacco giant, stubbed BAT 9.5p to 579p. Gallaher fell 8p to 414.5p and Imperial Tobacco 4.5p to 712p.

General Electric Co, down 26p to 505.5p, was unsettled by indications its Marconi merger with British Aerospace will come up against the regulators of Brussels. BAe, which believes the deal is "entirely a matter" for the British Government, was lowered 14.5p to 425.5p.

BAA, the airports group, was grounded by a large stock overhang. The shares fell 22.5p to 708p.

WPP was one to benefit from an expected profits announcement next week. The advertising group hardened 21.25p to 472p. Around pounds 210m against pounds 177.4m is the likely outcome. Even Rank, the struggling leisure group, perked up ahead of results. It is expected to suffer a pounds 45m fall to pounds 258m. The shares rose 4.25p to 203.25p.

Engineers fell back as takeover excitement faded; Morgan Crucible lost 11.5p to 211p and Vickers 6.5p 138.5p. Builders remained strong, reflecting the low interest age. Barratt Developments firmed 5p to 271.5p and Berkeley 23.5p to 588.5p.

Berisford, the kitchen and catering equipment group, ended 7p higher at 205.5p after rejecting a break-up approach.

On-Line, the computer games group, was up to its old tricks, surging 56.5p to 155p. The shares, a notoriously narrow market, started the year at 12.5p, subsequently hitting 273.5p before resting at around 100p. A possible link with Nintendo was responsible for the latest jump. The company said talks were in "an advanced stage" for the right to become the developer for Nintendo.

Profit warnings hit Ultima Networks 1p to 2.5p and Birse, a construction group, 2p to 8p.

Austin Reed, the menswear retailer which has fallen sharply in the past year, smartened up with a 11.5p gain to 99p. The market was puzzled by some small but persistent buying orders. Last year the shares touched 215p.

Desire Petroleum, riding at 445p last year on hopes of Falkland Islands oil, fell 1.5p to 16.5p, a low.

London & Edinburgh Publishing held at 10.75p. It placed, through Townsley & Co., 1.1 million shares at 11p. On Monday the company, thought to be in talks for a substantial acquisition, produced an upbeat trading statement indicating profits for last year could approach pounds 400,000.

SEAQ VOLUME: 1.17bn

SEAQ TRADES: 96152

GILTS: 114.61 -1.12

INTRIGUING DEVELOPMENTS are rumoured at perennial Irish oil punt, Bula Resources, unchanged at 1.25p. Albert Reynolds, the former Irish premier, is said to be on the verge of becoming chairman. In a further shake-up two other newcomers will join the board with three directors quitting. A cash-raising exercise is also likely and there is talk of oil developments in Libya and Iraq. Bula was last above 2p two years ago.

CCI, THE old clay pigeon business suspended at 125p, is planning to return to market as a computer group. It is taking over software and hardware distributors and will become XKO Group. As part of the deal pounds 13m is being raised through a share placing. The revamp has been organised by Simon Beart who becomes deputy chairman and finance director. CCI shares arrived on AIM in 1996 and moved between 108p and 190p.