Market report: Footsie surges past the 5,700 milestone

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The Independent Online
For the seventh time this year Footsie climbed to a new peak - rushing ahead 89.6 points to close at 5,709.5. With seconds to go it looked as though the index would miss the milestone of a 5,700 close. But a sudden 10 points surge ensured it ended at its best level of the day, comfortably into 5,700 territory.

The supporting indices also hit new highs, with the midcap over 5,000 for the first time, but once again it was a blue hips' party.

The record January debt repayment, a rampaging New York opening and expectations of yet more corporate action spurred the stock market.

Another, even more important influence, was evident - buying from domestic institutions.

Many fund managers have this year been desperately trying to redress their earlier caution. They spent last year sitting on the sidelines, condemning the rampant Footsie display as an investment aberration.

Now they are scrambling to catch up. Many must be under intense pressure from their trustees, dismayed by the poor performance of many funds.

The sale by Accor, the French hotel group, of 5 per cent of Compass, the contract caterer, was cited as an example of fund managers' urgent need for good quality shares.

Accor sold to Dresdner Kleinwort Benson and HSBC, seeming at 801p. The two then placed the shares at 810p with institutions. The sale was completed in the proverbial blink of an eye.

The French once had 20 per cent of Compass. Their shareholding stemmed from the takeover of the Eurest catering group in 1995. They now have 4.7 per cent.

Compass, where hopes of a Rentokil Initial bid still linger, shaded 1p to 829. The French sale should not hinder the caterer's bid for inclusion in Footsie when the steering committee meets next month.

On current form Compass and Northern Rock are set for membership with Rank, reporting year's figures on Friday, and Dixons in the relegation zone.

BT added 13p to 590p. Option activity was a factor. There was also buying ahead of an investment dinner at London's Claridges Hotel, hosted by Henderson Crosthwaite, for 16 fund managers.

Financials, particularly insurances, were again strong but Barclays, on its results. slumped 118p to 1,813p. And National Westminster Bank lost 9p to 1,165p as the prospect of a Barclays strike seemed to weaken. Insurer GRE led the Footsie leader board with a 32p gain to 440p; Commercial Union, rumoured to be in talks with GRE, was not far behind, up 55p at 1,071p.

Norwich Union rose 14.5p to 467p.

Arcadia, the retailer split from Debenhams, eased 3.5p to 484p, as Henderson suggested the shares would look overvalued at 500p. Many other retailers drew comfort from the market's buoyancy with Marks & Spencer up 13p at 580p and Next 23.5p to 831p. But poor old Sears once again missed the fun. The shares fell 1.5p to 49.5p; they were 83p a year ago.

Another long-term casualty, engineer BTR, shaded to 161.5p. Credit Suisse First Boston was thought to have placed 13.5 million shares.

A touch of reality surfaced at Tadpole Technologies with the shares falling 14p to 32.5p as some of the more nimble footed speculators snatched their profits. Last week they were 10p and on Monday touched 62p.

Ivory & Sime, the fund manager, returned at 201.5p from a 197p suspension. Dealings were halted to allow the pounds 132m merger with Friends Provident to be put together. The new group will manage funds of pounds 22bn. Amvescap, the fund manager rose 11.5p to 589.5p following a 14.4 million trade, possibly a bed and breakfast exercise, at 578p.

Davis Service, the garment hire and laundry group taking in the Spring Grove and Sunlight names, climbed 12.5p to 339.5p, a new high. US buying is said to be spurring the shares. There is also talk it plans a major acquisition in the laundry industry.

Prestwick, a printed circuit boards maker, hardened 8.5p to 58p after disclosing a bid approach. Two months ago the shares were 30.5p. TT, the acquisitive conglomerate, sits on 7.8 per cent of the capital and is the most likely predator.

Food group Cavaghan & Gray jumped 30p to 111.5p as Northern Foods mounted an agreed 115p a share offer, pricing the company at pounds 79.2m.

Freeport Leisure put on 30p to 289.5p. Interim profits emerged 39 per cent higher at pounds 1.4m; the factory outlet group has paid pounds 12.1m for a 30 acre site near Leeds which has outline planning permission.