Market Report: High returns from hi-tech investments

ANY SHARE with the most remote Internet connection is in danger of hitting the stock market heights.

The Internet vogue, with assorted computer and telecom associations, was one of the major driving forces in the market's latest advance which, for once, embraced shares outside the exclusive Footsie index. With US software giant Microsoft producing stronger than expected second quarter figures, the hi-tech brigade did not have to look far for inspiration.

Psion, the hand-held computer group, was a front-runner in the hi-tech stakes, soaring 118.5p to 845p. The growing possibility of a General Electric Co. bid was one influence. Another was indications that other groups had joined its Symbian joint venture aimed at promoting palm top computer operations. But Psion, surprisingly, was reluctant to name any of the latest recruits.

Many obscure AIM stocks joined in the party; Intelligent Environment led what often seemed a mindless romp, surging 28.5p to 68p. Netcall, which said it knew of no reason for its share surge "other than perhaps intense current market speculation concerning valuations to be attached to Internet-related shares", jumped 35p to 85p.

Others were chased. Internet Technology raced ahead 42p to 141.5p and IS Solutions surfed 82.5p to 287.5p. The list also included Recognition Systems, up 4p to 16p, and PhoneLink, 7.5p to 39.5p.

Even the stockbroker Durlacher, renowned for its small company hi-tech and Internet links, joined in the fun with a 115p jump to 585p.

In-Line, which has become the mystery Internet share, was again seeking the stratosphere. It jumped a further 101p to 273.5p. The yearly shareholders' meeting came and went without any official word to the market. The company is a tiddler - even now its capitalisation is only pounds 9m.

The shares started last week at 16.5p. Since then, directors have sold stock to - it is said - try to improve market liquidity. The company's portfolio includes Iron Wolves, said to be a submarine simulator and Doink, described as a "free multi-player puzzle game". Zergo, on its accountancy links, gained another 65p to 767.5p.

Top performing blue chip was the information group Reuters which, the market assumed, must have Internet connections. The shares rose 88p to a 868p peak. Profits, due to be released next month, are expected to be down - Merill Lynch is shooting for pounds 570.5m against pounds 634m.

Others caught on the world wide web included such telecom faithfuls as Colt Telecom, 77.5p higher at a 1,325p peak, and Telewest Communications, 13.25p at 263p. Misys added 25p to 475p and Sage 80p to 1,845p.

Great Universal Stores, 49p higher at 728p, was chased on its vague Internet links and Dixons, which became an Internet player before Christmas, rose 40p to 1,059.5p, a peak; the shares were 472.5p in July.

The uninhibited rush to climb aboard the latest hi-tech bandwagon is reminiscent of the heady early days of the bio-tech boom when untried and untested groups roared ahead, losing touch with reality. Today, many of the bio fledglings drift along unwanted and unloved.

Footsie ended 78 points higher at 6,105.6 and even the supporting indices made headway. Renewed hopes of lower interest rates helped sentiment.

An array of trading statements had a mixed impact, with John David Sports rising 12p to 82p but Thorntons, the chocolate chain, melting 17.5p to 196p.

Moss Brothers, the clothing chain, held at 134p although it forecast a profits fall, and Alldays, the convenience stores chain, crashed 85p to 92.5p. Colefax & Fowler, the furnishing group, gained 5p to 71p and Grampian, the retailing and transport group, 9.5p to 95p. Cranswick, the food group, improved 22.5p to 316p after suggesting year's profits will be pounds 6.5m against pounds 5m. But First Leisure Corporation lost 22p to 192.5p following a disappointing trading performance.

British Aerospace struggled out of its nose dive, recovering 24.5p to 450p. But General Electric Co., the other half of the Marconi deal, continued to fall, losing another 21p to 525.5p.

Marks & Spencer, following criticism of its spring fashion range, gave up 9.75p to 337.5p and Cadbury Schweppes lost 34p to 920.5p on worries about its soft drinks sales and the failure of its arch-rival, Nestle, to meet growth expectations.

Zeneca rose 66p (after 107p) to 2,834p. Rumours continue to swirl that its merger with the Swedish Astra drugs group will be challenged. Latest to assume the market's mantle as counter bidder is SmithKline Beecham, supporting the story by falling 11.5p to 880.5p in busy trading.

Shell, the oil giant, managed a 3.75p rise to 339p on stories from Paris it planned an alliance with Elf Aquitaine.

House of Fraser, the department stores chain, had another eventful session. The shares rose a further 4.5p (after 7p) to 92.5p in busy trading with Joe Bloggs creator Shami Ahmed said to have built a near 5 per cent shareholding. Field, the packaging group, actually collected a bid. The US group Chesapeake Corporation is offering 320p a share and Field rose 23p to 316.5p.

A threatened miners' strike left National Power under pressure. The shares fell 20.5p to 510.5p as workers at hard-pressed RJB Mining voted on strike action. RJB fell 3.5p to 52.5p. The mining group and NP are in talks to put in place guaranteed order for eight pits in Yorkshire, where 4,700 miners work.

British Airways dropped 14p to 375p. Chief executive Bob Ayling briefed analysts, prompting CSFB to cut its share price target to 330p. A Westminster decision to refer the pounds 75m take-over of CityFlyer Express to the Monopolies and Mergers Commission also hit sentiment.

British Steel, following investment meetings, rose 124.5p to 119p. CSFB put a target of 145p on the shares, down to 87.5p last month.

Blue Circle Industries was again hit by profit downgradings, falling 14p to 257p.

Aegis, on bid hopes, improved 8.25p to 113.5 in busy trading. And Adam & Harvey jumped 25p to 142.5p.

SEAQ VOLUME:

SEAQ TRADES:

GILTS INDEX:

SHARES OF Bickerton, the building contracting and property development group, firmed to 35p after lifting half year profits from pounds 44,000 to pounds 102,000. For the year around pounds 300,000 is in sight but it is next year that the AIM-traded group should start to perform with hopes running high profits will comfortably top pounds 1.5m. The shares came to market two years ago and have been as high as 45.5p.

CONROY DIAMONDS & Gold held at 59.5p on the fringe Ofex share market. The Irish explorer, created by Professor Richard Conroy, could be on the verge of establishing a significant gold mine in County Monaghan. Mr Conroy says there are indications the company may have "discovered the first major gold mine in the British Isles". He admits, however, there is "an awful lot of work to do". CD&G is capitalised at pounds 5.7m.

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