Market Report: Grand Met raid enlivens a dull session

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The Independent Online
A HAM-FISTED attempt to bear raid the Grand Metropolitan giant failed dismally yesterday.

Stories, apparently originating in Switzerland, went the rounds that the food and drink group had run into trouble in the foreign exchange market, suffering losses of up to pounds 60m.

The shares, already drifting lower in line with the market, suddenly dived a further 10p to 394p. But Grand Met reacted quickly. It let it be known it 'has no net currency exposure' and added: 'There is absolutely no truth in this rumour about a pounds 60m foreign exchange dealing deficit.' The shares rallied a little to 398p, down 11p.

There appeared to be little, if any, selling at the lower prices. Buyers, mostly unsatisfied, were quickly evident.

Grand Met is a soft target for scare stories. It caught the market on the hop when it warned in August that profits in the year ended last month would be little changed at pounds 950m. Since then many City estimates have been pulled back to nearer pounds 900m.

The group has been hit by weak trading conditions in the US fruit and vegetable market, where it has extensive packaged interests through its Green Giant offshoot.

A foreign exchange disaster has already been encountered by one international food and drink group. Last year Allied-Lyons suffered a near pounds 150m loss on forex dealings. The Allied fiasco led to top management changes.

Still, the Grand Met raid enlivened what had been an exceedingly dull session, with shares tending to ease back, unsettled by the increasing political tension. A Confederation of British Industry survey, due today, is expected to confirm that business confidence has continued to dwindle since the exchange rate mechanism debacle.

At the close the FT-SE 100 index was down 8.1 points to 2,661.6. The growing interest in second-line shares was again underlined by the new FT-SE 250 index, up 3.7 at 2,509.6.

Trading was thin, with volume bolstered by a pounds 100m two-way overnight trade and several big share placings. They included a 40 million agency cross in Invesco MIM, the fund management group, at 77p, which lifted the shares 8.5p to 77p.

British Steel had a difficult session following its production cuts. There are fears losses this year will reach pounds 175m with a loss of up to pounds 50m in the following year. It is felt unlikely that an interim dividend will be paid, with only a token final. The shares ended 6.5p lower at 56p.

TSB Group, the bank that has attracted intense takeover speculation, was only 1p lower at 142p, despite two savage profit downgradings. Carr Kitcat & Aitken lowered from pounds 180m to pounds 150m. But Smith New Court pushed its forecast to pounds 125m.

The engineer Babcock International tumbled 4p to 30.5p. The group has brought forward its interim statement to tomorrow. Dismal figures are expected, perhaps pounds 15m against pounds 23.69m, and a slashed dividend.

Imperial Chemical Industries, figures on Thursday, responded to US buying, gaining 19p to 1,066p. Hoare Govett remains nervous about prospects and the analyst Martin Evans warns he may have to pull back his year's forecast of pounds 620m.

Redland, down 10p at 342p, and Marley, 4p at 76p, were hit by Barclays de Zoete Wedd downgrades. The investment house lowered Redland from pounds 198m to pounds 192m and from pounds 200m to pounds 195m and Marley from pounds 15m to pounds 10m and from pounds 25m to pounds 20m. Increasingly competitive conditions in the tile market prompted the revisions.

Reed International dipped 13p to 581p. Interim figures are due on Friday, when adjustments, because of sterling's weakness, to the Dutch Elsevier deal may be announced.

Wellcome rose 18p to 1,009p. Profits are due tomorrow; pounds 510m is expected against pounds 403m. The erosion of Bill Clinton's lead in opinion polls may have helped. Medeva, involved in investment meetings, gained 5p to 198p.

Storehouse, at last confirming its Habitat and Richards sales, rose 3p to 164p.

Portsmouth & Sunderland Newspapers held at 510p. Associated Newspapers (Daily Mail and General Trust) placed its 7.5 per cent interest with institutions.

The electrical group Bennett & Fountain held at 4.5p as 8.8 million shares were traded at the market price; the steel group Brown & Tawse rose 2p to 58p as the mini-conglomerate Suter lifted its stake to 7.38 per cent.

British Data Management eased 1p to 133p. Smith New Court placed NM Rothschild & Sons' 1.14 million shares. Oxford Instruments was squeezed 19p higher to 211p. The shares were thought to have formed part of the buy element of the two-way programme trade.

After a year deep in the doldrums, shares of Buckingham International, the heavily borrowed hotel group run by the father-son team of Nurdin and Nick Jivraj, are showing signs of life. In a week they have risen 3.75p to 7.75p; still, however, a far cry from the 95p hit in 1991. The group, which was the subject of a pounds 30m refinancing in June, has hotels in Florida.

Shares of International Media Communications could enjoy a re-rating. Yesterday the group built on its return to profits by reporting a swing from a pounds 715,000 loss to a pounds 378,000 profit in the year to April. Further progress should be made this year and an acquisition, probably related to its Alpine soft drink off- shoot, will be announced soon. The shares are 4p.