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
Start your day with The Independent, sign up for daily news emails
ebookA unique anthology of reporting and analysis of a crucial period of history
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

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?
Season's finale brings the end of an era for top coaches and players across the continent

The end of an era across the continent

It's time to say farewell to Klopp, Clement, Casillas and Xavi this weekend as they move on to pastures new, reports Pete Jenson
Bin Laden documents released: Papers reveal his obsession with attacking the US and how his failure to keep up with modern jihad led to Isis

'Focus on killing American people'

Released Bin Laden documents reveal obsession with attacking United States
Life hacks: The innovations of volunteers and medical workers are helping Medécins Sans Frontières save people around the world

Medécins Sans Frontières's life hacks

The innovations of volunteers and medical workers around the world are helping the charity save people
Ireland's same-sex marriage vote: As date looms, the Irish ask - how would God vote?

Same-sex marriage

As date looms, the Irish ask - how would God vote?
The underworld is going freelance: Why The Godfather's Mafia model is no longer viable

The Mafia is going freelance

Why the underworld model depicted in The Godfather is no longer viable