Market Report: French banking merger revives financial stocks

THE PROPOSED pounds 600bn French banking merger reawakened slumbering hopes of a big financial deal.

In the past year or so a multitude of rumours have swirled, linking among others: Abbey National, Barclays, National Westminster, Prudential and Standard Chartered. But the failure of a major deal to materialise took its inevitable toll and financials lost much of their takeover-inspired shine.

But the French connection sent a new wave of merger excitement through the financial community. Abbey led the banking feast: the shares surged 62p to 1,326p. Not far behind was Alliance & Leicester, up 39p to 838.5p and National Westminster Bank, 58p up at 1,413p. Barclays put on 50p to 1,814p and Lloyds TSB 22.5p to 940p.

The attempted French consolidation involves BNP bidding for rivals Societe Generale and Paribas. Almost certainly the deal will be challenged, with Germany's Dresdner among those thought to be interested. There is also the possibility of a British bank barging into the suggested triple alliance.

The banking excitement helped Footsie to end with a modest 3.8-point gain at 6,241.5p. It was at one time down 69.1 points. The initial reaction to the Budget was mixed. As expected consumer shares were firm, but tobacco shares again felt the pinch.

Life, however, continued to brighten on the market undercard. The mid cap index rose 33.3 points to 5,409, its 13th gain on the trot. It is now back at levels last seen in early August. The revival in the often overlooked reaches of the market was underlined by yet another gain by the small cap index, which put on 11.2 points at 2,334. Turnover was again heavy, with Seaq putting share volume at more than 1.1 billion.

Reuters, the information group, was the best-performing Footsie constituent. Investment briefings prompted a round of upgrades, which helped push the shares 65p higher to a 967.5p peak. But results left Pearson 85p off at 1,337p.

The Footsie shakeup was much as expected. Energis, South African Breweries, Misys and Emap joined the exclusive club, and Gallaher, Safeway, Williams and Tomkins were relegated.

SAB's controversial inclusion - it only arrived on the market on Monday - means that two South African shares now have Footsie membership. The other is miner Billiton. At least two other Springbok shares could join the index this year.

Gallaher's fate was sealed by Chancellor Gordon Brown's latest increase in tobacco duty, The shares were weak on Budget day and fell a further 22p to 392.25p. Imperial Tobacco lost 41p to 677.5p and British American Tobacco coughed up 8p to 549.5p.

Among those elevated to the mid cap index were Waste Recycling; Matalan, the retailer up 98p to 551p following figures; and bid target Albright & Wilson, the chemical group. Corporate Services, Scapa and Hillsdown Holdings were among those booted out.

Peel, a property group, scored a 27 per cent gain to 633.5p after indicating that it was thinking of going private.

As tobacco shares wilted, drinks gathered strength. The no-change excise duty lifted Bass 40.5p to 941p, Scottish & Newcastle 16.5p to 722p and Whitbread 4.5p to 937.5p. Diageo, results today, slipped 3p to 721.5p - a confusing set of figures is expected with a dividend cut likely.

Granada added 27.5p to 1,321p as rumours continued to circulate that the leisure group is getting near to attempting its next major takeover deal.

Retailers also received the Brown boost. Debenhams rose 28p to 472.5p, a peak, and Arcadia 15.5p to 219.5p.

Next, the fashion chain, smartened 18p to 747p despite share sales by Tiger Fund Management, the US hedge fund where Baroness Thatcher is an adviser. It cut its stake, largely created last year, to 9.32 per cent by selling 4.24 million shares last week.

Cable & Wireless Communications and Telewest Communications fell back as the Budget day cable merger rumour duly disappeared. CWC fell 15p to 720p and Telewest 5.5p to 270.5p.

Northern Foods hardened 4.5p to 111p. BT Alex.Brown made cautious noises, and also downgraded Hazlewood Foods, up 1p to 116p, and Dairy Crest, off 0.5p at 291.5p.

Waddington, the packaging group, eased 1p to 177.5p as Merrill Lynch said profits this year would emerge at around pounds 31m against the pounds 36m achieved last year.

London Forfaiting, the trade finance group hit by the Asian turmoil, improved a further 9.5p to 74p, with takeover rumours continuing to swirl. The shares have climbed from a bombed-out 42p this month; last year they touched 475p. Trading was again brisk.

Springwood, the leisure group that recently announced it was trading well, rolled out profits a little ahead at pounds 1.4m but added just before market close: "We believe that 1999 will show a marked increase in performance and greatly enhanced prospects". The shares fell 4.5p to 104p. The group is run by Adam Page, the former headed of Midsummer Leisure.

Howard, the house building and property concern, edged forward 2.5p to 71.5p. The shares have moved ahead from 17p since November and gained 26.5p this month. Irish entrepreneurs Frank Gormley and Greg Coughlan took control last year. The group is expected to acquire significant development properties in the Cork and Dublin suburbs and is seeking a Dublin listing.

Waste group Caird rose 27.5p to 262.5p, a 12-month high. A steady seller, it is said, has been accommodated.

Geo Interactive Media, hit by a profits warning on Tuesday, rallied 16p to 65p. Stories circulated that the group was near to a link with Nokia.

DRS Data & Research rose a further 1.75p to 15.5p, and Sports Internet's run continued with a 20.5p gain to 135.5 on its third day of trading.

Advertising group Saatchi & Saatchi firmed 9p to 183.5p, just below its peak. A bid for Cordiant Communications has been rumoured. But Cordiant, it would appear has not been approached. Its shares rose 4.5p to 164.5p after profits of pounds 25.9m against pounds 23m.

SEAQ VOLUME: 1.1 billion


GILTS INDEX: 112.74 +0.24

Suggested Topics
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
Louis van Gaal would have been impressed with Darren Fletcher’s performance against LA Galaxy during Manchester United’s 7-0 victory
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
ebookA unique anthology of reporting and analysis of a crucial period of history
Rhys Williams
commonwealth games
Isis fighters travel in a vehicle as they take part in a military parade along the streets of Syria's northern Raqqa province
Arts and Entertainment
Southern charm: Nicolas Cage and Tye Sheridan in ‘Joe’
filmReview: Actor delivers astonishing performance in low budget drama
Life and Style
fashionLatex dresses hit the catwalk to raise awareness for HIV and Aids
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

The benefits of being in Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Test Analyst - UAT - Credit Risk

£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

Finding the names for America’s shame

The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears