Market Report: Footsie falls to its lowest level of the year

FEARS of another Gulf confrontation and a surprising mid- day sale programme ensured the stock market ended a depressing account on a suitably sombre note.

The FT-SE share index collapsed another 22.3 points to 2,377.6, thereby breaching yet another of the supposedly crucial resistance levels (2,380) and stretching the decline over the account to 113.6.

The Footsie is now at its lowest level of the year. It started 1992 at 2,492.8.

There had, before trading started, been hopes the 'green shoots' of market confidence had been detected. But, with Tokyo plunging to a new six-year low and renewed talk of higher German interest rates, shares moved lower from the bell.

At one time the Footsie was down 37.8 and talk of a fall to 2,200, not so long ago dismissed as arrant nonsense, was no longer confined to hushed whispers.

UBS Phillips & Drew's intervention occurred at lunch time. It suddenly became apparent the securities house was engaged in a sell programme - some thought it involved six stocks and was worth pounds 32m, others said it was more widespread and worth more than pounds 70m.

Whatever the size it was obvious that attempts to sell large lines of stock in such a fragile market would drive shares lower. UBS, which appeared not to complete the programme, certainly managed to hit prices.

Among the blue chips on the UBS sell list were Grand Metropolitan, Guardian Royal Exchange, Lloyds Bank, MFI Furniture Stores and Reed International.

The Wellcome countdown continued to distort the scene. Wellcome shares fell 4p to 826p. Barclays de Zoete Wedd's bid to establish an index fund for the Wellcome Trust appeared to be going well with a late rush of propositions.

The threat of renewed Gulf conflict hit leisure and transport shares. Forte fell 3p to 152p; Ladbroke Group 3p to 172p; British Airways 10p to 248p and BAA 12p to 630p.

Trafalgar House was weak although its luxury hotels were only one of the bearish factors. After hitting 59p the shares closed at 63p, down 4p.

Like so many in the construction and property industry, Trafalgar is suffering. There is a growing suspicion the year's dividend may be slashed to a token level compared with hopes it would merely be halved to 9.2p.

However, Wolseley, the building materials group, won the support of BZW after a lunchtime meeting. But the securities house has put the builders Costain Group and Alfred McAlpine on its sell list.

A few oils ticked a little higher on the new Gulf tension. But Lasmo fell 8p to a year's low of 117p. The heavily indebted group is due to announce its results on Wednesday.

Monument Oil & Gas edged ahead 0.5p to 33.25p. Nomura is impressed by the latest strike in Morecambe Bay. The shares, it believes, are 45 per cent below asset value and should be picked up. Lasmo is also involved in the Morecambe Bay developement but, as Kleinwort Benson observes, in the present climate the 'signifiance of this discovery will probably not be appreciated for some time'.

Banks, as the interim profit season loomed, gave ground although County NatWest, long-term bear of the sector, turned slightly more positive.

The sale sign over County's parent, National Westminster Bank, has been removed. 'There is clear evidence of operational turnaround at some of the problem subsidiaries where the UK operations look less vulnerable than at other banks and where the dividend is safe'.

Barclays, where a maintained dividend is expected, is also off the sell list.

British Steel was back in the furnace, down 1.5p to 53p. Hard pressed British Aerospace, as foreign shareholdings increased to 20.33 per cent of the capital, fell 7p to 192p.

Bass tumbled 17p to 522p as Cazenove downgraded and rumours swirled that the brewing group was contemplating buying the up-for-sale Rank Organisation hotels. But Daiwa believes it is time to buy. The group will perform better than most of its competitors once the Beer Orders take effect in November.

The failure of the Greene King bid for Morland hit both shares. Greene King fell 40p to 467p and Morland's Houdini-style escape left it 41p lower at 420p.

Euro Disney had another poor session on the worsening trading outlook, falling 20p to 995p.

Mirror Group Newspapers continued to attract attention - up 3p to 72p, trading again busy - and Reuters felt further selling pressure following its figures, down 19p at 1,011p.

The FT-SE share index finished above its low point yesterday, down 22.3 at 2,377.2. At one time it was off 37.8 points. The FT 30-share index was lowered 19 points to 1,789.1. Despite a programme trade, volume was only 495 million shares with 22,099 bargains logged. Government stocks were little changed.

The stock market may be down in the dumps but, according to Sharelink, the private investor is alive and well - and banking on a recovery. The execution-only broker, which carries out one in every four such deals, says this week buyers have outnumbered sellers, reversing a recent pattern. Recovery stocks are the attraction, such as Costain Group and Tarmac.

The pop promoter Harvey Goldsmith appears to have given up his battle to become an influence at the staid British & American Film Holdings. His Allied Entertainments has sold most of its 20 per cent shareholding, with SG Warburg appearing to do the business. BAFH is a closely controlled company headed by Sir John Woolf. Its shares, a narrow market, are about 650p.

(Graph omitted)

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