Market Report: Footsie goes along for the ride as Dow Jones soars

THE FTSE 100 yesterday resembled a passenger being driven at high speed in a sports car. The Dow Jones index was firmly in the driving seat, soaring away after a benign set of employment figures.

The numbers should stave off the much-feared US rate hike, and a relieved Wall Street slammed its foot on the accelerator to post a record-breaking triple digit rise. The London blue-chips were comfortably seating alongside their US big brother, coming within striking distance of their all-time peak. The end of the week excitement left the index 104.1 points higher at 6205.5.

The buying momentum slowed a bit towards the end of London trading, pushing the index down from its session's high of 6243.3. It was a rip-roaring performance nevertheless, and the smaller indices struggled to keep pace. The FTSE 250 finished 33.6 up to 5348.4, while the small cap posted a 15-point increase to 2304.4.

The Anglo-Saxon buying spree came after some good rallies on some of the Eastern exchanges. The Hang Seng index was among them and Hong-Kong related stocks had a field day in London. Cable & Wireless was on the right line after its majority-owned unit HongKong Telecom hinted at an Internet collaboration with Microsoft. The presence of "Microsoft" and "Internet" - two of the market's favourite words - in the same sentence sent C&W's shares up 30.5p to 855.5p.

The reawakened Internet frenzy helped Dixons, the latest on-line play, to a 53p rise to 1,191.5p - a five-year peak.

HSBC, the Hong Kong based bank, shared in the domestic fun, cashing in a 106p increase to 1910p. Standard Chartered, the other big Eastern financial house, missed out, ended 7.5p lower at 823p as investors took a dim view of a discounted share placing. Warburg and Cazenove lodged pounds 400m worth of stock with institutions at around 784p. Standard will use the proceeds to fund acquisitions.

It was a day of big placings and hefty share sales. TI, the bombed-out aerospace engineer, surprised everybody with the sale of a 4.9 per cent stake to KKR, the US leveraged buyout kings. The heroes of the Barbarian at the Gates book paid 400p a share for the stake.

TI said the money will be used to fund US acquisitions and there is no "chance" of a takeover by KKR.

Dealers did not know whether to believe them or not and pushed the shares 34.5p higher to 445p just in case.

Other engineers fared well too. McKechnie was the pick of the bunch, flying 29p higher to 377.5p as Merrill was rumoured to have selected it as a core sector holding.

Sema, down16.5p to 700.5p, was on the receiving end of a stake sale. The French bank Paribas offloaded a 4 per cent stake in the information technology group as part of a derivatives deal. The Gallic financial house said it did not want to sell its remaining 10 per cent but the move dashed Sema's hopes of entering the FTSE 100 at next week's reshuffle.

Williams, the fire and security group, could avoid relegation to the FTSE 250, after rising 11p to 359.5p. A CSFB upgrade to strong buy plus a 500p price target were responsible.

Gallaher, the cigarette maker, damaged its chances of remaining in the top flight by puffing away 14.25p to 420.25p. Royal & SunAlliance, certain to remain in the FTSE 100, was hit by some late trades and retreated 21.5p to 566.25p. Share buying by the chairman Sir Patrick Gillam did not deter the sellers.

United News & Media, the publishing group, rose 22p to 653p on good results.

Geest, the banana group, slipped 15p to 361.5p after Cazenove placed 1.5 million shares at 350p, a near 7 per cent discount to the share price.

Axon, a software group sold 18 million shares at 175p, netting pounds 32.8m to get ready for the Thursday float.

The placing feast was completed by South African Breweries, another aspiring blue-chip. The beer group pushed 11 million shares ahead of Monday's float. The stock put on 9p to 465p on the grey market.

Synstar, an IT company, paid for its limited pre-float publicity with a 8p fall to 134p in its first day of full-blown trading. The shares have shed over 20p since last week's start of conditional dealings.

Swan Hill, the housebuilder, subsided 9.5p to 63.5p after the collapse of takeover talk. A promised pounds 15m capital return to shareholders did not help much. Chemring, a military engineer, marched 14p lower to 132.5p after breaking up bid talks with a mystery financial buyer.

The media agency Aegis was down 2.25p to 128.25, after revealing that the chief executive and the finance director had netted around pounds 3m from the exercise of options.

SEAQ VOLUME: 1.21 billion



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