Market Report: Interest wearing thin as rash of rights continues

THERE are signs that the stock market is growing tired of the relentless flow of cash calls.

The uncertain performance of Zeneca since the Imperial Chemical Industries split is seen by many as the most obvious indication of increasing indigestion.

The shares, despite a relatively low rating, have performed poorly. Yesterday the ordinary shares fell 3p to 617p and the nil paid shaded lower to 20p.

With the pounds 1.3bn cash call fixed at 600p, the issue is looking increasingly shaky.

The builder George Wimpey, with a pounds 104m demand, and the retailer Brown & Jackson, pounds 21m, are the latest to join the rights ranks. Wimpey fell 3p to 184p and Brown & Jackson, the Poundstretcher shops chain, 0.5p to 14.5p.

Including Zeneca, the market has had to contend with cash calls totalling about pounds 6.5bn this year. And to pile on the pressure, the Government's pounds 5.5bn sale of its remaining shareholding in BT is under way.

The property sector has displayed the most vociferous desire for shareholders' cash. Even before the international speculator George Soros descended on the British Land group Slough Estates, Brixton Estates and Land Securities had tapped the market. British Land, Great Portland Estates and Southend Properties have since added to the weight of property rights.

Some wonder whether Wimpey will, for the time being, be the last to be able to make a pounds 100m-plus call, although many investors are still encouraged by the argument that the time is ripe to repair balance sheets, allowing companies to take advantage of opportunities emerging as the recession eases.

But the growing market anxiety was mirrored by the performance of the British Land and Royal Insurance nil paid shares. British Land fell 5p to 81p and Royal 5p to 29p.

The rights demands added to the pressure on shares, with the FT-SE 100 index 6.9 points down at 2,860 and the previously high-flying FT- SE 250 index off 5.7 at 3,207.7.

Norman Lamont's outburst had little impact. But Eddie George, the next Governor of the Bank of England, dampened spirits by warning against further interest rate cuts because of inflationary tendencies.

Glaxo Holdings, as if trying to offer a little comfort to Zeneca, rose 14p to 596p, inspired by an investment meeting. Wellcome remained under the whip of Hillary Clinton and the proposed US healthcare changes, falling 6p to 720p.

British Aerospace, after recent progress, slowed down, gaining a mere 2p to 425p. The Indonesian Hawk contract helped. So did comments from Societe Generale Strauss Turnbull that its medium-term target for the shares is 600p-700p, with pounds 10 likely over the longer term.

Rolls-Royce, providing engines worth pounds 50m for the Hawk aircraft, rose 2p to 152p. Foreign shareholders have continued to buy shares and are now hitting the 29.5 per cent ceiling imposed by the Government. The possibility of overseas investors being forced to dump shares could hold back the price.

BAA, reflecting disappointment with the May airport passenger figures, dropped 15p to 739p.

Tate & Lyle, the sugar group, rose 7p to 378p, a 16p gain in two days. Panmure Gordon likes the shares, and there are rumours that buy recommendations are being prepared.

Rothmans International, the tobacco group, ended 2p lower at 622p. Henderson Crosthwaite believes the shares are 30 per cent undervalued. The group's spread of interests could be worth 730p a share. Profits for last year are forecast at pounds 608m with pounds 668m likely this year.

Hickson International, the chemicals group, dropped 15p to 217p. Kleinwort Benson and NatWest Securities did the damage. Kleinwort said sell and NatWest, cutting pounds 1.5m from this year's forecast to pounds 32m, moved from buy to hold. But Croda International put on 5p to 281p, responding to UBS Securities support.

Leading brewers weakened, with the market worrying about production figures. Bass lost 11.5p to 459.5p. Lower sales at LVMH, the French drinks group, left its Guinness associate unchanged at 478p. But the return to profitability of Eldridge Pope, the family-controlled Dorset brewer, pushed the 'A' shares 8p higher to 101p.

American influences helped British Petroleum up 4.5p to 314.5p and Danka Business Systems 55p to 805p. But ADT, Michael Ashcroft's Bermuda-registered car auction and security group, ran into US selling, falling 25p to 600p.

Betterware, the door-to-door selling operation, dipped 8p to 240p as the controlling Cohen family sold 13.4 million shares at 230p through Barclays de Zoete Wedd and Albert E Sharp.

Carlisle, the property services group, advanced 2p to 18.5p in response to the increased interest of Nigel Wray, the entrepreneural investor. He has lifted his stake to 10.18 per cent. Corporate Services, the recruitment group, rose 3p to 25.5p following the Carr Kitcat & Aitken recommendation.

Lynx, the computer and playground equipment group, gained 4p to 37p on its takeover of a computer service for motor dealers and a placing and open offer.

The FT-SE 100 index ended 6.9 points down at 2,860 and the FT-SE 250 index 5.7 off at 3,207.7. Turnover reached 620.2 million shares with 26,871 bargains recorded. The account ends on 18 June with settlement on 28 June. Gilts edged ahead.

The shares of Zetters, the pools group, are beginning to intrigue. They edged ahead 1p to 111p, the highest for a year and a surprising performance in view of the lower interim profits and the difficulties the group would encounter from the planned National Lottery. There is speculation that the shares' strength stems from the possibility Zetters could become involved in running the lottery.

Quayle Munro, probably the first Scottish merchant bank to come to market, made a firm debut, opening at 123p and moving to 130p. The bank was pumped into East of Scotland Industrial Investments, which had much of its portfolio in unquoted shares. Quayle Munro was the company's investment manager. ESII thought about seeking a listing as an investment trust before opting for Quayle Munro.