Market Report: Footsie makes another visit to the peak district

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The Independent Online
ANOTHER day, another peak. For the seventh time this month shares soared to new highs, with the FT-SE 100 index stretching 32 points to 3,188.3.

Even the second-line FT-SE 250 index, which has tended to lag blue chips, got in on the act, topping its last peak, achieved towards the end of August.

Once again interest rates were the name of the game, with futures activity generating much of the excitement.

The surprise half-point German cut increased pressure on the Chancellor to lower British rates, and as the stock market was closing there were strong rumours that a cut was likely to be announced today.

Overseas investors, for so long the dominant influence, were pushed into the background as some domestic institutions seemed to be panicked into a catching-up buying spree.

Most blue chips joined in the fun and even Imperial Chemical Industries recovered early falls to end unchanged at 709p. More securities houses joined the sell chorus. NatWest Securities, looking for nine-month figures of pounds 55m, and Kleinwort Benson, shooting for pounds 65m, think the shares should be sold.

Rothmans International, the cigarette group, was one of the heaviest-traded shares, with Seaq putting turnover at 19 million. The price advanced 24p to 621p as funds jockeyed for position ahead of Rothmans' exclusion on Monday from the FT-SE 100 index. The identity of its successor will be known today.

Rothmans' departure, unpopular in many quarters, stems from the Footsie committee's decision to emphasise the 'Britishness' of constituents by insisting they pay, or intend to pay, franked dividends.

The South African-controlled group is splitting itself in two - Rothmans, taking in the tobacco operations, and a new creation, Vendome, embracing the luxury goods business.

Since it became apparent that Rothmans would lose its index place its shares have been under pressure. The Dunhill Holdings associate, disappearing in the shake-up, has also been hit.

But Henderson Crosthwaite is attracted to Rothmans and Vendome shares. Its analyst Clive Richardson believes the two will open around 350p. At such a level they will be 'substantially undervalued'.

He sees Rothmans as the income share, with up to 15 per cent dividend growth. Vendome is regarded as the growth share, a 'major beneficiary of any recovery in the luxury goods industry'.

Besides shares in the new set- ups, Rothmans and Dunhill shareholders receive cash distributions. Dunhill was unchanged at 345.5p.

Trafalgar House rose 4.5p to 93p. The price for the convertible preference rights issue will not be fixed until December.

Some expect the shares to stage a strong performance in the meantime, with benefits of the association with Traf's Hong Kong masters starting to become evident.

Drug shares were strong, helped along by comments at the New Orleans drug conference. Wellcome led the charge, up 36.5p to 823p.

British Steel gained 3.5p to 129.5p with James Capel positive. But the stockbroker hit Inchcape, the international trader. It cut its profit forecasts from pounds 278m to pounds 265m and from pounds 320m to pounds 290m. With talk of a large line of stock hovering, the shares dropped 18p to 512p.

Shoprite, the retailer, rose 7p to 179p on a Barclays de Zoete Wedd presentation. Micro Focus gained 653p to 1,598p as NatWest Securities downgraded its profit expectations but said buy. 'A mere market rating implies a price of 2,000p,' it said.

RMC, helped by the German rate cut and a forthcoming analysts' visit to Germany, rose 16p to 838p. De La Rue, the packaging group talking to analysts, improved 5p to 730p and Wolseley, said to be planning an investment trip to France, improved 8p to 701p.

Parkland Textiles celebrated its return to the black and the end of its two-tier share structure in fine style. The ordinary shares jumped 105p to 365p and the 'A' shares 48p to 221p.

Allied London, the property group, slipped 3p to 113p as the retiring director Morris Leigh sold 11.59 per cent of the capital. MR Data Management improved 11p to 194p with a large share overhang cleared.

Multitone, the electronics group, fell 18p to 105p following a profit warning and British Building & Engineering held at 245p as Albert E Sharp placed the 75 per cent BM shareholding with institutions. BM was little changed at 21p.

Virtuality's heady run continued, up another 12p at 322p. The estate agent Conrad Ritblat held at 47p - a director, Peter Goldsmith, sold 1.25 per cent at 46p.

The Turkish delight at Old Trafford clipped Manchester United 22p to 560p as hopes of a lucrative European Cup run receded.

The leading indices hit new highs. The FT-SE 100 index gained 32 points to 3,188.3 and the FT-SE 250 19.1 to 3,526.2. Turnover was 745.6 million shares with 32,356 bargains. The account ends on 29 October with settlement on 8 November. Gilts were firm.

Dealings resume today in the shares of Amberley, a building preservation group, following the pounds 6.25m acquisition of Lawrence Industries, a distributor of performance minerals used in a variety of industrial and household products. The shares were suspended at 40p, with the Lawrence deal completed at 38p. Albert E Sharp expects profits of pounds 400,000 this year and pounds 1.5m next.

Sanderson Electronics, a computer services group, continues to raise cash by cutting its shareholding in its US associate, General Automation. It has collected a further pounds 423,000 by selling 750,000 shares, reducing its interest to 21 per cent. The group intends to go below 20 per cent. Sanderson, which had 49 per cent earlier this year, was little changed at 307p.