Market Report: Interest rate hopes see index at new peak

SHARES stretched to a new closing peak yesterday. The FT- SE 100 index rose 14.6 points to 2,882.6, with interest rate hopes generating much of the enthusiasm.

Although the Chancellor has apparently ruled out an early cut in UK rates, the stock market took the view that shares could, with a little luck, enjoy a strong run ahead of this month's Budget.

With at least one securities house predicting that the FT-SE 100 index would top 3,000 before the Budget, and indications that Germany will lower its interest rates this week, the mood was decidedly bullish.

But trading was patchy. Domestic institutions seemed content to sit on the sidelines, with much of the buying coming from foreign investors.

The action was directed at blue chips, with the view gathering strength that they had been neglected in the bull market created by the UK's enforced sterling devaluation in September.

The FT-SE 100 gain would have been even more pronounced if dividend payments had not stripped 7.54 points from the calculation. The FT-SE index, measuring the next 250 shares, finished 1.7 below its peak.

Utilities were strong, with dividend yield considerations once again dominating investment thoughts.

Great Universal Stores came to life as the market picked up a story that the cash-rich high street and mail order group had embarked on a property-buying spree.

It seems the decline in interest rates has prompted GUS, which already embraces a huge property portfolio, to switch perhaps as much as pounds 1bn into property investments. GUS voting shares rose 25p to 2,575p and the non- voting 'A' shares 39p to 1,682p.

Fisons, the pharmaceutical group, reporting today, put on 8p to 229p, with some suggesting the results will be accompanied by details of an overseas tie-up.

General Accident, another producing results today, advanced 26p to 595p. A loss of about pounds 35m is expected, compared with a pounds 172m loss. The possibility of a rights issue hovers.

Asda, the supermarket group, gained 1.25p to 63.25p as Hoare Govett said buy, and Whitbread 'A' ignored a profit downgrading from Barclays de Zoete Wedd, improving 10p to 469p. BZW cut last year's estimate by pounds 11m to pounds 215m and this year's by pounds 20m to pounds 232m.

Reckitt & Colman edged forward 4p to 626p despite an unsuccessful attempt to place a line of 500,000 shares.

Carlton Communications and Rank Organisation felt the impact of the revelation that the Blockbuster retailing group is working on a laser system that would allow it to duplicate videos in its branches.

Carlton, ex a 10.3p dividend payment, fell 19p to 778p; Rank, ex a 20.75p dividend, was down 20p at 667p.

Whessoe, the engineer, advanced 7p to 320p as the market anticipated an impressive take- up of its pounds 14.3m rights issue.

The cash will go towards the acquisition of Autronica, a Norwegian instrument company. Whessoe already has the support of two-thirds of Autronica's capital.

Castle Mill International reflected the increased involvement of Brian Roussell, gaining 2.5p to 13p; Gabicci, the clothing group where takeover talks are in progress, edged forward 1p to 38p. Another clothing group, SR Gent, rose 8p to 60p in sympathy.

The Manchester brewer Joseph Holt's remarkable progress continued, up 75p to a 2,850p peak. The shares have frothed up 250p in two trading days.

Beauford, a machine tool maker, halved to 7p. It has been forced into a capital reconstruction. Ferranti International rose 1.5p to 15.25p on hopes of a Saudi Arabian contract.

Frost Group, the petrol retailer, made headway in its new slimline form, climbing 6p to 186p. Profits are thought to have advanced from pounds 2.5m to pounds 5.75m last year.

Prime People, the specialist training group that blotted its copybook with a profit warning shortly after a revamping exercise, edged forward 0.5p to 4p.

The shares fell to 2p when it warned in January that profits would be below expectations. They have shown signs of recovery in the past few trading days.

Tuskar Resources, fighting a bid from the Aminex oil group, returned to market. The shares, suspended on the USM, are now traded on the Irish exploration market. They traded at 1p, roughly in line with the Aminex offer, which Tuskar has rejected. The price topped 80p in 1989.

The FT-SE 100 index closed near its best of the day, up 14.6 to 2,882.6. The FT-SE 250 index rose 13.6 to 3,049.7. Turnover was subdued by recent standards, reaching 535.1 million shares with 33,426 bargains. Government stocks were firm with some issues scoring gains approaching pounds 1

The problems of Hartstone, the hosiery and leather group, increased yesterday. The shares, hit last week by a Barclays de Zoete Wedd downgrading, endured further torment as another securities house, thought to be Smith New Court, made noises, apparently suggesting it had suffered extraordinary losses. The shares fell 27p to 190p. A week ago they were 270p.

Takeover action could soon return to James Wilkes, the engineer. Suter, the mini-conglomerate run by David Abell, has picked up 8.9 per cent. It acquired 2.9 per cent in January at 43p a share and the rest on Friday and yesterday. Wilkes shares romped ahead 18p to 66p. A year ago Wilkes beat off a 200p-share exchange offer from the Petrocon engineering group.

The housebuilder Fairbriar returned to the market yesterday. The shares opened at their 8p suspension price, fell to 4.5p and closed at 7p. The Epsom-based company is one of the few to obtain a requotation after going into administrative receivership; the accountants Ernst & Young were appointed in September 1991. But a reconstruction has led to the rebirth.