Market Report: Internet craze pushes Dixons to new high

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DIXONS, the electrical retailer for long in the stock market doghouse, charged to yet another new high. The shares were at one time up 106p; they closed with a 71p gain to 1,414p. In July they touched 477p.

The stock market Internet craze has been a major influence in the group's performance. On Friday Schroders, the investment house, published calculations which indicated Dixons shares were worth 2,000p.

It said the chain's fledgling Freeserve Internet access service could be worth 1,000p a share with the core retailing business in for 970p.

The shares got the Internet bug when the success of the Freeserve link became apparent just at the time the market was beginning giddily to surf the World Wide Web.

Ahead of the Freeserve arrival, Dixons had recovered its cherished Footsie place and has since consolidated its position. Profits last year emerged at pounds 218.7m. At the interim stage they were lower and progress throughout the rest of the year is not expected to have been particularly exhilarating , with the market consensus around pounds 233m.

Footsie ended a rather featureless session off 10.4 points at 6,152.8. At one time it was up 36.9. Around half the fall could be explained by shares going ex-dividend. Woolwich, Allied Domecq and Pearson were among those lowered to account for dividend payments.

The mid cap index was also off form but the small cap, helped by takeover bids and the growing realisation of the value lurking on the undercard, was firm, gaining 12.4 to 2,399.1.

Telecom shares firmed, with Telewest Communications leading the Footsie leader board with a 15.75p gain to 253.25p. Securicor, as stories resurfaced of BT taking full control of the Cellnet mobile phones group, rose 28.5p to 554p. It is suggested that Securicor is asking pounds 3.6bn for its 40 per cent stake. BT rose 13p to 1,012p but Colt Telecom fell 23p to 971p.

Scottish Power was at one time 9.5p higher on expectations that its Scottish Telecom operation would soon be floated. But once it was realised any deal would not occur until towards the end of the year the appeal faded and the price ended 11.5p lower at 549.5p.

British Energy brightened 31p to 548.5p after Warburg Dillon Read and Merrill Lynch took a shine to the group.

Bass, the brewing and hotel group, failed to respond to Morgan Stanley enthusiasm. The shares fell 9p to 910.5p although the investment house raised its target price to 995p from 900p

Rentokil Initial hardened 10p to 385.5p on BT Alex.Brown support, and EMI fell 9p to 427.5p following meetings with analysts. Goldman Sachs told its clients that profits of the showbiz group could emerge at the lower end of market estimates. The securities house was said to be reviewing its own two-year estimates of pounds 208m and pounds 216m.

Takeover action on the market undercard underlined the belief that corporate activity remains strong. Much of the latest action occurred in two bombed out sectors - healthcare and property. Westminster Healthcare jumped 115p to 300p as Canterbury Healthcare produced a 311p a share offer. Canterbury is the creation of Dr Chai Patel, the founder of the Court Cavendish healthcare group.

On the property pitch it was Greycoat at the centre of the action. The shares rose 31.5p to 200p as Delancey Estates, related to George Soros, mounted a hostile share exchange strike. It was quickly rejected. Delancey has 11 per cent of Greycoat, which has in the past attracted the attention, but so far no suggestion of corporate action, of Wates City of London Properties.

Chesterfield Properties, which has caught the predatory interest of Quintain Estates & Development, rose 31.5p to 4216.5p. At one time the shares were up 60p.

Hall Engineering held at 140p, although there were signs that TT, the conglomerate, may increase its 97p a share hostile offer. A rival bid is expected from Hall's management, led by chief executive John Sword.

Regent Inns is likely to be under the weather today. After the market closed the pubs chain said its merger talks with SFI, which last week appeared to be going well, had been called off. The shares were little changed at 172.5p.

South Country Homes was suspended at 44.5p. It is buying a leisure company for pounds 3.35m.

Eurocopy, the office equipment group, climbed 5.25p to 25.25p on reports of a venture capitalist bid from Italy.

Premier Oil firmed 1.5p to 15.25p on takeover speculation. Tim Eggar, the former Tory minister who heads Monument Oil & Gas, believes industry restructuring is "inevitable and desirable". Monument shares shaded to 43.5p. The rest of the oil sector was little changed ahead of today's Opec meeting, which is not expected to have much impact on the market.

Iceland, the frozen food retailer, was in fine form, gaining 25p to 275p. Figures are due today. About pounds 55m is expected against pounds 43.5m. SG Securities rates the shares a buy.

Scotia firmed 11p to 106.5p after the US Food and Drug Administration awarded "fast track" status to its Foscan cancer drug. Proteus International rose a further 4.5p to 49.5p following investment meetings. However Nomura International cut its stake to 8.9 per cent, selling 137,000 shares.

Victoria, a carpets group planning a pounds 3m property sale, piled on 10p to 90p. The company is capitalised at around pounds 6.8m.

Theo Fennell paid the price for a late Friday evening profits warning, tumbling 8p to 24.5p. Reports of boardroom resignations at Corporate Services, already devastated by a profits warning, pushed the shares down to 73.5p, off 11p.

Some of the smaller mining shares came to life. Anglesey Mining rose 1p to 4.5p and Ennex International added 1.25p to 10p after its zinc prospect in Kazakhstan was said to have a capacity of 100,000 tonnes a year. Developing the mine and zinc refinery would cost around pounds 170m.

Business directory group rose 4.25p to 29.5p following its link with Energis, down 15p at 1,630p.

SEAQ VOLUME: 932.6 million


GILTS INDEX: 115.97 -0.13

VFG, which hires production equipment to the television industry, is nearly doubling its size through a share issue. It plans to raise pounds 10m by selling shares at around the current price, 52p up 4p.

More details, together with figures, are due on Monday. The group has made steady progress; profits last year were pounds 900,000. Since arriving on the market two years ago the shares have been as high as 64p.

COX INSURANCE enjoyed a late flurry, but it was not strong enough to prevent the shares falling 2.5p to 146p.

Towards the close a number of deals went through at 150p, with one trade booked at 152p.

Cox has had a dismal time, with the shares tumbling from 520p. They have been down to 132p.

The day's volume, with turnover put at 172,000 shares, was more than the group usually attracts.