Market Report: Invensys and Storehouse stories deliver double whammy to lacklustre dealing

INVENSYS AND Storehouse towered above a lacklustre market yesterday amid growing talk of corporate action.

The engineering giant formed from last November's merger of BTR and Siebe was hoisted 10.75p higher to 324.25p as buyers were attracted by the prospects of a hefty disposal. At the same time, the struggling clothes retailer shot up 6p to 132p amid late rumours of a bid from a UK or European rival.

The newer whisper centred on Invensys. Dealers think that the engineer is close to announcing the pounds 1bn-plus sale of three non-core divisions to a US buyer and good turnover of nearly 8 million shares added credibility to the suggestion.

The biggest disposal would involve the automotive division of the old BTR, which specialises in rubber seals for windscreens. Getting rid of the business would help Invensys to concentrate on high-technology automation and controls systems. It would also leave the group's boss Allen Yurko with a lot of cash to play with.

Dealers' mouths were watering yesterday at the prospect of an earnings- enhancing acquisition or another share buyback. The company is currently returning around pounds 1bn to shareholders and a further cashback would increase its stockmarket's fan club.

As for Storehouse, traders in the know revived speculation of a takeover of the troubled Bhs and Mothercare group. A European player was the new hot tip, although the names of Kingfisher, up 0.5p to 721.5p, Debenhams, up 4.5p to 396p, and retail entrepreneur Philip Green were also mentioned.

The Invensys-Storehouse double whammy provided a glimmer of action to a lethargic market. The FTSE 100 closed down 11.8 at 6563.2 after moving in a tight range for most of the session. A weaker Wall Street and some profit-taking were behind the move, and the dealers' overriding desire to square the books ahead of the weekend contributed to the apathy.

The mid cap shrugged off the leaders' fall and ended 7.9 higher at 6083.4, within a hair's breadth of its all time high. The Small Cap was flat as a pancake and closed 0.4 lower at 2746.4.

The aerospace stocks bucked the lacklustre trend and flew higher after some sky-high results from airplane-maker Boeing. Smiths Industries led the charge, firming 14.5p to 868p. Vague talk of a US takeover and two buy notes from SG and Albert E Sharp also helped. The prospects of some big contracts from Boeing's rival Airbus sent British Aerospace 2.25p higher to 428p, while airplane engine maker Rolls-Royce rolled 0.25p better to 260.75p.

Banks continued to be a good market. NatWest, up 40p to 1381p and Barclays, 41p higher to 1886p, were the best performers ahead of imminent results and amid continued talk of corporate action.

HSBC bucked the trend and shed 17p to 789.5p on the day of its US listing and amid growing opposition to the takeover of the New York-based bank Republic.

Business services group Hays moved 19p ahead to 700p on persistent rumours of a strike by Rentokil, up 2p at 241.5p. Bass frothed 20.5p higher to 951.5p as Allied Domecq, down 11.5p to 574p, agreed to talk to its ally Punch Taverns over the pubs' sale. Whitbread was up another 10p to 957p after withdrawing its bid on Thursday. The market is convinced that it might go for Greenalls, up 7p at 386p.

Marks & Spencer rebounded 10.25p to 387.75p after its disastrous sales performance, while EMI hit a wrong note, falling 16p to 554.5p on profit- taking despite a positive trading update. In the media sector, Reuters, results next week, beamed 15.5p higher to 918.5p after a US jury dropped its probe into alleged information-pinching from rival Bloomberg. Sector peer Granada jumped 9p to 672p on The Independent's story of Flextech's interest in GSkyB cable and satellite channels. Flextech, down 23.5p to 996.5p, could offer its stake in Scottish Media Group. The swap could trigger a Granada takeover of SMG, whose stock firmed 12.5p to 887.5p. On the downside, cable group Telewest dug a 13.75p fall to 305.5p amid fears of a costly auction with rival NTL for Cable & Wireless Communications, up 11.5p to 305.5.

In a related sector, the maker of digital TV decoders Pace Micro blinked 16p higher to a best-ever 241p as rumours of a large contract win were exacerbated by a stock shortage.

Iceland, the frozen food retailer, rose 15p to 296.5p as investors returned from a visit with a warm glow, while engineer Charter climbed 16p to 345p on vague bid whispers.

Talk of a revolutionary new product and bumper results pushed mobile phone maker Filtronic 31.5p up to 856.5p.

Eurotunnel sped up 6.5p at 98p even though reports that a change in the rules on foreign-listed shares would put in the FTSE 100 was denied.

Delay in the mooted bid from Shire Pharmaceuticals, down 1p to 579p, sent Medeva 10p lower to 133p. Continued fears of bad figures pushed IT company Admiral 45p down to 755p, while Pizza Express slipped 27.5p to 755p on half-baked rumours of tough trading.

Construction minnow Birse jumped1.75p to 9.25p. Some well-known investors like the company's recovery story and bought the stock after yesterday's good results. Rumours of a takeover, possibly from rival Bovis, boosted volume to an impressive 23 million.

Nursing homes group CrestaCare soared 10.75p to 36.75p after receiving a 37p-per-share offer to go private from venture capitalist Alchemy. Personal Number, the provider of individual phone numbers, rang up a 14p rise to 64p. Punters and institutions bought before a good news-bearing AGM next week.

Plumbers' merchant PTS flushed 27.5p higher to 175p after unveiling bid talks. Baron, a developer of software systems for golf and tennis clubs, soared 82.5p to 182.5p on its AIM debut.

Ofex-listed events organiser Cardington was unchanged at 35.5p despite suggestions that it is preparing a major Russian exhibition.

Driller Griffing Mining jumped 7p to 20p on the back of a recent zinc discovery.

SEAQ VOLUME: 1.13bn

SEAQ TRADES: 72,739

GILTS INDEX: 106.52 +0.54

WILLIAM SINCLAIR looks more and more like a takeover target. Insiders believe a predator has been accumulating a stake in the specialist provider of peat for gardeners.

The stakebuilding could have been encouraged by Sinclair's chequered trading history. Over two years, the shares have fallen from 265.5p to yesterday's 120.5p as the wet weather made for difficult peat-digging. A Nordic peat-producing giants could be interested.

TOWN CENTRE Securities, the property minnow, yesterday developed a 6p rise to 80p as some cunning investors moved in. Dealing room whispers suggest that management could take the company private. The move would have a certain logic.

The shares, which topped 117p a year ago, have fallen sharply and trade at a hefty discount to net asset value. Chairman Israel Ziff, managing director Edward Ziff and finance director Duncan Syers hold over 10 per cent.