Market Report: Footsie romps ahead on rate cut hope

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The Independent Online
HOPES THAT the Monetary Policy Committee will slash interest rates today enabled blue chips to score another century gain. The stock market expects at least a half-point cut; there are even calls for a full one- point reduction.

With New York strong and many overseas markets moving ahead, Footsie was in rampant form from the opening bell. At one time it was up 141 points before closing with a 119-point gain at 5,622.9.

Supporting shares were also buoyant,. with the mid cap index achieving a 59.7-point gain to 4,971.4 and the small cap 18.6 to 2,066.6.

Chancellor Gordon Brown's optimistic forecasts and pre-Budget statement gamble did nothing to harm sentiment, and even a firmer display by sterling was overlooked.

Trading conditions were squeezy, with sellers conspicuous by their absence. There was a tendency for buyers to pounce on shares which suffered severely in the bear run and also to chase those where the ratings gap with US counterparts has widened significantly. Takeover chatter was also in the air.

In some quarters there was a feeling that the redundancies among market makers at Merrill Lynch had tended to exaggerate some of the price movements.

Bass, up 56.5p to 769.5p, was an example of the oversold; the shares were 1,175p earlier this year. WPP, the advertising group which led the Footsie leader board with a 42.75p gain to 348.75p, was cited as a share which drifted too far from ratings enjoyed by transatlantic rivals.

Exporters on a roll included GKN, 51.5p to 764.5p, and Rolls-Royce, 21.75p to 249.75p.

Takeover speculation gave unexpected boosts to some near-forgotten bid candidates. United Biscuits, famed for some dramatic gyrations in the early 1990s, firmed 19p to 249p. The shares hit 446p at one point as rumours swirled around that Cadbury Schweppes was about to strike, but the price crumbled to a low of 195p last year after the group's trading deteriorated and it was forced to reshape.

Marley, the building materials group, was another bewhiskered candidate back in the bid frame, gaining 7p to 77.5p.

Chemical group Elementis, 7p higher at 105p,also enjoyed speculative support; so did Davis Service, the cleaning group, up 23p at 353p. Provident Financial, up 36p to 970p, and builders merchant SIG, 13p at 151.5p, were pushed higher on hopes of corporate activity. An abandoned management buyout at SIG is thought to have alerted would-be predators.

British Aerospace flew 11.75p higher to 486.75p as stories of a European alliance circulated again.

Suggestions coming from BT Alex.Brown that hotels were starting to win price increases also contributed to the enthusiasm. Analyst Mark Finnie said the hotel derating had thrown up good buying opportunities.

His comments helped lift Ladbroke, still benefiting from Sutherland's bullishness, 21.75p to 252.75p and Jarvis Hotels 8.5p to 113.5p. Part of the Bass improvement may have been attributable to Mr Finnie.

Hong Kong made conflicting contributions to the proceedings. Cable & Wireless was the day's worst-performing blue chip, off 24.5p to 641.5p on worries about the figures tomorrow from its Hong Kong Telecom associate. But HSBC featured in a strong banking sector with a 72p gain to 1,585p.

Logica, the computer group, rose 70p to 1,980p ahead of today's four- for-one share split and Enterprise Oil slipped 15p to 390p after Phillips & Drew trimmed its stake to just under 13 per cent, selling 373,000 shares.

Quicks, the garage chain, stuttered in with the inevitable profits warning, reversing 19p to 66.5p as a result. Lorien unsettled IT recruitment shares after blaming a marked slowdown in demand for IT contractors for a profits shortfall. Lorien lost 37.5p to 122.5p and Parity dipped 25p to 407.5p.

Honeycombe Leisure, the pubs chain floated by Butterfield, made a heady debut, closing at 62.5p from a 55p placing.

Graham, a builders merchant, fell 20.5p to 135.5p as Albert E Sharp reduced its profit estimates. The stockbroker cut this year's figure from pounds 25m to pounds 23.5m and next year's from pounds 30m to pounds 25.5m.

Polypipe, expected to announce some bolt-on acquisitions soon, hardened 8p to 126p. Charterhouse Tilney was buying in the market; it expects profits of pounds 37.5m this year and pounds 42.5m next.

Telemetrix spurted 13.5p to 44p after it appeared that its 57 per cent- owned US offshoot, GTI Corporation, had overcome barriers to its being acquired by Technitrol.

Independent Energy flared 65p to 467.5p; the electricity supplier has fixed up a six-month trial alliance which will allow it to offer an electricity/gas package. The company now has 2,500 electricity business customers.

SEAQ VOLUME: 1.1 billion


GILT INDEX: 110.94 +0.45

SHARES IN Forward Technology Industries stuck at 11p as long-running talks with its management to buy its video side rumble on.

Any bid - and a number of conditions remain to be settled - will be nearer to 23p a share against earlier hopes of 27p. The group is also involved in talks, which have now reached an advanced stage, to sell its audio operations. Two years ago Forward Technology shares touched 100p.

CELSIS INTERNATIONAL, the healthcare group, was busily traded with suggestions that the long-awaited takeover bid could be near. The price held at 28p.

The group has had an uncomfortable market life. Like so many of the breed it has yet to produce profits. Two years ago its shares were at 141p with expectations for the group's diagnostic and monitoring systems running high. They later fell to 22p.