Market Report: Footsie flirts with 6,500 as bid talk swirls

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The Independent Online
BLUE CHIPS stretched to yet another peak. With an interest rate cut possible today and New York again above 10,000 points, Footsie stretched a further 57.9 points ahead to close at 6,473.2. At one point it was up 80.8 and seemingly intent on breaking through 6,500.

Talk of mega-takeover action is also swirling, encouraging shares to move ahead. There is a widespread belief that a bid is being prepared for a Footsie constituent, although there is little unanimity about the most likely target.

Telewest Communications, the cable group involved in the latest round of corporate activity, headed the Footsie leader board with a 23p gain to 319.5p, a peak.

On Tuesday it disclosed it was in talks with Cable & Wireless Communications, 40.5p higher at 795p. Cable & Wireless, holder of 53 per cent of CWC, was 22p ahead at 797.5p.

Much of the latest activity revolved around financial groups. The Halifax survey showing a 4.4 per cent year-on-year rise in house prices, together with today's base rate cut hopes, gave mortgage banks a boost.

Halifax put on 48.5p to 850p and Woolwich 10p to 395.75p. Alliance & Leicester rose 32.5p to 905.5p and Northern Rock 20.5p to 555p. Abbey National jumped 77p to 1,338p. But the mortgage banks and other financials were also influenced by the market's sixth sense that corporate activity is not far away. Standard Chartered added 48p to 972.5p; Barclays, down to 838p in October, jumped 75p to a 1,955p peak.

But, even among the high flying blue chips, it was not all one way traffic. Pearson, the banking and publishing group, was one to head south; the shares fell for the second day running, losing a further 70p at 1,295p. They hit a 1,431p peak in February. A profits fall at its recently acquired US group, Simon & Schuster, is threatening the market's profit forecasts; the consensus is currently pounds 408m.

Reed International was another publishing group seeing red. The resignation of two directors and its failure to find a chief executive lowered the price 14p to 553p.

Granada, seeing analysts, and Smiths Industries, on currency considerations, moved ahead, with Granada putting on 67p to 1,306p and Smiths 32p to 908p.

AstraZeneca, the new drugs colossus, remained under the weather, falling 71p to 2,875p. Other drugs shares also had an unhealthy look with Glaxo Wellcome down 29p to 2,185p and SmithKline Beecham off 16.5p at 911p.

Mid caps shares improved on Footsie's coat tails, but the small caps, although moving ahead, were far from exuberant. The mid cap index rose 41.8 points to 5,498.5 and the small cap edged forward 4.1 to 2,411.1.

BICC led the mid caps, spurred on by a possible disposal and bid. Wassall's conditional offer is now 110p a share; it will not go ahead if BICC sells its energy cable business for pounds 250m to General Cable, a former Wassall company. BICC, down to 38p before the market got wind of bid action, climbed 12p to 106p.

Cornwell Parker, the furnishings group, rose 12p to 98.5p after signalling increasing bid attention, and Capital Industries gained 2p to 43.5p as it described the 40p-a-share offer from Rutland Trust as inadequate. A higher bid for Coutts Consulting of 47p a share lifted the price 6p to 46p.

Waterfall, the leisure group run by ex-Rank executive John Garrett, finally produced its offer for European Leisure. The all-share strike values European, which has 23 per cent of Waterfall, at around 115p. Mr Garrett is barging into what appeared to be a cosy merger deal between European and the tenpin bowling group, Allied Leisure.

Monument Oil & Gas, where predators circle, firmed 2.5p to 50.25p, and engineer Morgan Crucible, a rumoured bid candidate, hardened 8.5p to 222p.

Stanley Leisure, the betting shop chain bidding for casino group Capital Corporation, fell 9.5p to 263.5p in heavy trading. It appeared some large lines of stock went through at 250p, well below the then ruling price.

Arm, the computer chip maker, was another riding high - up 302.5p to a 3,185p peak. Acorn, the computer group sitting on 23.7 per cent of the chip business and still puzzling how to hand the stake to its shareholders without incurring a huge tax bill, logged a 29p gain to 251.5p. Arm's figures are due soon and there are hopes a solution will accompany the results.

Furniture chains were given a lift by hopes that the long downturn was at last ending. DFS rose 16p to 282.5p and Uno 12.5p to 48.5p. Poor old MFI remained flatpacked, unchanged at 34.5p.

Harvey Nichols, the department stores group, rose 11p to 188.5p. Shares of Dickson Concepts, owning 50.1 per cent, were suspended in Hong Kong pending a deal that may merely be a freehold sale. Others are looking for a bid for the minority or the sale of the Dickson stake to a predator, possibly LVMH.

Other retailers perked up. Next, the fashion chain, rose 55p to 807p and Kingfisher added 12.5p to 823p.

Struggling textile group John Foster jumped 50 per cent to 15.75p; the shares were 7p on Tuesday before it was known that two arriving directors had paid 13p each for 225,000 shares. The IAF contingent has quit the group, which lost pounds 409,000 in the six months to last August.

Chorion, the old Trocadero, firmed 0.75p to 24.5p. The merchandising group, which has moved into London West End bars under the direction of chairman John Conlan (ex-First Leisure Corporation) is meeting analysts.

Wiggins, the construction and property group, shaded to 16.5p after reporting that it had taken control of Manston Airport from the Ministry of Defence. London Manston Airport, as the operation will be known, expects to obtain a civil aviation licence in June.

The company confirmed it was seeking other airport acquisitions and was in "advanced" talks with potential financial partners.

SEAQ VOLUME: 1.01bn

SEAQ TRADES: 99,253

GILTS INDEX: n/a

STEPHEN DEAN, who sold most of his shareholding in Environmental Property Services in February, is planning to create an information technology vehicle.

The first stage will be the launch on AIM of a cash shell, Voyager 2000. It is planning to raise pounds 750,000, placing shares through stockbroker Fiske & Co at 5p.

Dealings are expected to start later this month. Mr Dean, who is 48, will subscribe for 30 per cent of the capital.

ASSOCIATED British Foods struggled off its 12-month low after BT Alex.Brown said the food group's shares were a buy. The price rose 10p to 422p.

The investment house drew attention to AB Foods' conservative accounting policies and its 155p-a-share cash pile. Interim profits, due on Monday, should be up by 2 per cent to pounds 197.5m. Alex.Brown expects its profits for the full year to reach pounds 425m, up from pounds 413m the previous time.

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