Market Report: Generators rise on hopes of coal agreement

SHARES of National Power and PowerGen generated much of the stock market action yesterday as stories circulated that a deal had at last been signed with British Coal.

Although an NP spokesman denied any arrangement had been concluded, the generator's shares jumped 22.5p to 257p and its 'twin' PG rose 18.5p to 270p. Trading in the cash market was heavy and NP featured as the most actively traded option contract.

The Government, anxious to prepare British Coal for privatisation, is known to be putting intense pressure on the two generators to agree a coal deal. Wednesday is thought to be the deadline for an agreement.

The surge in the generators' shares was based on assumptions that the groups were on the verge of extracting a much better deal than at one time seemed likely. One stockbroker felt sufficiently encouraged by the suggested terms that it lifted its NP profit forecast by pounds 40m.

But some fretted that wires were crossed and the excitement could be short-lived. Nigel Burton at SG Warburg said the share progress was based on the 'most optimistic assumptions'. He added: 'NP is up more than 20p; it could be down 30p if the sums do not add up.'

The Scottish generators missed the fun. Scottish Hydro-Electric rose just 0.5p to 212p and Scottish Power gained 6p to 186p.

The power surge was good for the rest of the electricity sector, and waters, the other main utilities, made headway.

At the close the FT-SE share index was up 13.1 points to 2,340.6 with its large utilities contingent fuelling much of the headway. The market was moderately encouraged by the tone of the latest flood of company results, but currency movements continued to create anxiety.

RTZ advanced 22p to 514p and BTR 19p to 425p. Unusually for a builder, John Laing made progress on its results, up 11p at 120p.

But Cadbury Schweppes, down 14p at 415p, Booker, 22p at 325p, and Glaxo Holdings, 7p to 746p, were among those lowered on results.

A programme trade, thought to be by one of the US securities houses, helped to inflate volume; even so turnover was only 485.6 million shares.

Stores were weak, held back by another gloomy Confederation of British Industry survey.

Wellcome edged ahead 3p to 848p with US investors still said to be picking up stock. James Capel produced a buy circular. London International Group recovered 11p to 174p.

Dunhill Holdings fell 5p to 414p. Panmure Gordon has trimmed its profit forecast by pounds 3m to pounds 77m. Guinness, reporting next week, fell 9p to 523p. Expectations have been pulled back. A modest gain, say 3 per cent to pounds 360m, is forecast and there are worries the figures will be accompanied by a cautious statement.

Vickers was at one time down 18p at 80p, closing at 84p. The loss-making engineering and vehicles group cut its dividend last year and there are worries it may not pay an interim dividend when it reports later this month. The loss of the pounds 1bn Swedish tank order has also unsettled sentiment.

J Sainsbury retreated 16p to 430p, reflecting a failed placing. Hillsdown Holdings, after Wednesday's results, improved 5p to 88p as Kleinwort Benson implied the shares were a buy, up to 100p. English China Clays, also savaged on Wednesday following figures, fell another 10p to 361p.

Hovering lines and switch-into-Pearson advice ruffled Reed International, down 10p at 477p. Pearson put on 9p to 313p.

Monument Oil & Gas fell 1p to 32p as large lines of stock went through. Teroda, the little oil group, rose 2p to 11p on stakebuilding.

British Steel edged forward 2p to 49.5p. The US Fidelity funds have just over 4 per cent. Conglomerate Tomkins moved up 9p to 234p ahead of its shareholders' meeting.

Pubs chain Harmony Leisure held at 5.5p. The managing director, Stanley Lever, is resisting the attempt by hotelier Andrew Martyr to gain control.

He told shareholders: 'I find the suggestion that the Lever family should be removed from the board by persons who have no financial involvement in the company to be nothing short of opportunistic.'

Shares edged forward, with the FT-SE share index climbing 13.1 points to 2,340.6. The FT 30 share index rose 10.7 to 1,707.4. Trading remained thin: Seaq put turnover at 485.6 million shares with 16,387 bargains completed. Government stocks turned cautious after early gains.

Interest is developing in Penna, the outplacement consultant, which used to be called Sanders & Sydney. The group has cut overheads and with trading going well there are hopes that profits could move ahead strongly this year, perhaps getting back above pounds 2m. Last year the group suffered an pounds 84,000 loss. The shares held at 171p. They have been above 300p.

Stockbroker Teather & Greenwood's latest fine art survey offers just one share buy - Partridge Fine Arts. Analyst Michael J Hooper says the company has fought its way 'through the recession with less damage to its earnings than any other quoted dealer or auctioneer'. Profits of pounds 2.06m are expected this year with pounds 3m next. The shares held at 53p.

Motor dealer Gowrings continues to recover from unhappy diversification. The sale of one of its park homes bolstered interim profits to pounds 172,000 and there are hopes it will achieve pounds 300,000 for the full year. Interim dividend is held at 1p a share. Assets are 160p a share. The group is seeking to expand its garage operations but is unlikely to continue to develop its catering side.