Market Report: Insurance deal starts a wave of speculation frenzy

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The Independent Online
THE STOCK market went bid crazy. The long awaited insurance deal inspired another wave of frenzied speculative action among financial shares, helping Footsie to score a 94.1 points gain to 5,745.1, just 6.5 from its peak.

As the shares of Commercial Union and General Accident, merging to create the country's biggest insurer, fell back, GRE and Norwich Union led others higher as the market sought to spotlight the next deal.

GRE, helped by better-than-expected figures and a pounds 189m handout to shareholders, rose 34.5p to 475p. At one time it was CU's expected partner. Norwich climbed 21.75p to 496p. The shares were, shortly after last summer's flotation, trading at 312p.

Royal & Sun Alliance gained 27p to 778p and Prudential Corporation, again with the help of figures, ended 40p up at 934p. Underlining that it is often better to travel than arrive GA fell 85p to 1,370p and CU 35p to 1,095p.

On the banking pitch Standard Chartered starred yet again. The shares surged 124p to 882p on a surprisingly soothing trading statement which tended to highlight the bank's attractions, both on trading and takeover considerations.

Last month Standard's shares were bumping along at 543p. They have since risen on bid speculation as well as recovery hopes. At 543p the group looked a sitting duck; it is unlikely the more exotic price will frighten off a bidder.

Lloyds TSB gained 32p to 934p and Barclays 38p to 1,897p. Abbey National put on 33p to 1,320p. Year's figures are due today and in the present highly fired mood it would surprise few if the former building society also produced corporate activity. Halifax, up 3p at 924p, could also be gearing up for action with its results next week.

Schroders, still family controlled, was by current standards quite subdued, up 9p at 2,142p. Whispers point to a bid from Morgan Stanley, the US group.

The two bickering drug giants staged a modest recovery with suggestions in the air that Glaxo Wellcome could mount a hostile bid for SmithKline Beecham. Glaxo gained 81p to 1,738p and SB 42p to 766p. Nycomed and Zeneca, regarded as bid fodder in the present climate. gained 110p to 2,310p and 42p to 2,642p respectively.

Telecoms, another area where there is a huge expectation that corporate action will unfold, were active. Colt climbed 80p to ring a new 1,150p peak. BT, up 4p to 602p, and Vodafone, 7p higher to 539p, were others attracting attention.

Engineer GKN, where bid hopes have appeared recently, added 40p to 1,496p and bewhiskered old faithful Allied Domecq frothed 22p higher to 570p. Others caught up in the corporate speculation included Signet, up 0.75p at 36.75p.

Besides merger mania Footsie was spurred by a strong New York opening and the continuing recovery in Asian markets. Supporting indices stretched to new highs.

Elsewhere Courtaulds, the chemical group, gained 59.5p to 331p on its reshaping which, it is felt, will make it more vulnerable to a bid. Logica, the computer group, jumped 132.5p to 1,365p following results, encouraging other IT shares.

Utilities remained subdued on regulatory fears. Anglian Water sunk 26p to 792p and Hyder 6.5p to 907.5p. Southern Electric, with the added disadvantage of Deutsche Morgan Grenfell caution, fell 40p to 510p.

Bass added 21p to 1,012p. Merrill Lynch upgraded the shares to "accumulate" following the pounds 1.8bn Inter-Continental Hotels & Resorts acquisition.

A profit warning from HP Bulmer, the cider maker, soured the shares 96p to 310p and a half year loss at Acatos & Hutcheson, the edible oil group, left the price 36.5p down at 225p. An apparent pounds 900,000 loss at an offshoot lowered electronics group Radamec 29p to 57p.

Photobition, the printing services group, firmed to 303.5p ahead of an investment dinner at London's Savoy Hotel, hosted by stockbroker Henderson Crosthwaite.

Scotia, the drugs group, raising pounds 50m through a convertible issue, was firm at 325p; Seton Healthcare, paying SmithKline pounds 4.75m for a hangover cure called Resolve, held at 553.5p.

Faber Prest, a distributor, jumped 90p to 455p. Bid talks, seemingly with the management, are near completion. A 500p offer is expected.

Dawson, the newspaper distributor, gave up 16p to 155p, prompting the company to express annoyance a market maker had cut the share price to generate business.

House builders put on a good showing following the George Wimpey results. Wimpey rose 5p to 122p. NatWest Securities expect profits of pounds 80m this year and pounds 96m next.