MARKET REPORT : Investors expecting fireworks on Monday and here

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The Independent Online
The FT-SE 100 index fell 13.1 points to 3,025.1 and the FT-SE 250 index 5 to 3,391.4. Turnover was only 494.1 million shares with 19,828 bargains. Government stocks fell by up to half-a-point.

A dull stock market was content to occupy itself with thoughts about a dramatic surge in trading on Monday - when dealings start in the partly-paid shares of National Power and PowerGen.

Private investors, who long ago outgrew the derogatory "Sid" description, have clamoured for shares, encouraged by the incentives the Government has offered them to join the £4bn sale, the last big privatisation of the current Parliament.

More than 1 million investors applied and yesterday the Government increased their allocation from 40 to 60 per cent of the issue to accommodate demand.

The huge public response has made nonsense of fears that the Barings debacle would hit the sale. In fact Sid's response has exceeded many of the expectations held before the Barings disaster hit the headlines on Sunday.

The market is, of course, braced for heavy two-way trading, with many private investors attempting to snatch profits and underweight institutions, cut back to 20 per cent of the issue, looking for stock.

Many heavyweight institutions, however, may bide their time, hoping the price will drift lower. But with the tantalisingly high yields and the other incentives, some stockbrokers believe more private investors will this time resist the temptation to go for a quick kill, ignore the political worries, and hold on their their shares.

A good premium is expected. Against the 170p sale price NP is expected to open at 188p and PG, offered at 185p, at 205p. NP fell 5.5p to 456.5p and PG 2p to 492p.

The FT-SE 100 index ended what has been a fretful week 13.1 points down at 3,025.1. The Barings collapse failed to have the traumatic impact many expected and the index ended the week with a modest decline.

Inflation and interest rate pressures eased and the Government's narrow Euro vote victory should have provided the impetus for shares to struggle out of the hole they have been in for much of this year. But Barings, followed by currency turmoil with the US dollar under pressure, combined to restrain any tender shoots of enthusiasm.

It has, in particular, been a poor week for builders. Profit warnings, real and rumoured, did much of the damage.

Banner Homes, down 34p to 70p over the week, started the demolition; then Countryside Properties produced a cautious trading statement which lowered the shares 11p to 87p. Bellwinch, disowning a profit forecast by its stockbroker, Hoare Govett, contributed to the unease.

The traditional Friday profit caution, however, came from Dawson International, the knitwear group, down 12.5p to 96.5p.

Financials stole the limelight. It was again the turn of the securities house Smith New Court to lead the pack. The shares jumped another 26p to 486p, driven higher by a rash of small buying, with one of the biggest deals, 50,000 shares, being undertaken at 397p.

Once again the Rothschild 20.1 per cent shareholding created the excitement. Yesterday Schroders, known to be keen to expand its securities operations, was back in the frame as the buyer, ahead of a bid.

The persistent buying of one of the smaller quoted securities houses has occurred at a time when the financial sector is in disarray. Since Wednesday Smith has risen 59p.

Whitbread's withdrawal from the Courage auction left the shares 6p lower at 532p. Scottish & Newcastle, presumably the only bidder still in contention, was little changed at 498p.

BT had a torrid session, falling 6p to 376p. Nynex, the cable group, said it was cutting line rental and call charges for business and residential customers. It claimed the average customer would save 25 per cent compared with BT charges.

Nynex is still a small player in the UK and its cuts will have only a modest impact. But its promotion is another example of the increasingly fierce competition in the telecommunications industry. Goldman Sachs added to the unease surrounding BT by moving the shares off its buy list.

The arrival of a German competitor, Escom, unsettled Dixons, down 5p at 205.5p. The German computer maker is buying 231 Rumbelow stores from Thorn EMI.

Tate & Lyle, the sugar group, fell 6p to 421.5p as more securities houses made cautious noises. Societe Generale Strauss Turnbull and UBS did the latest damage.

MFI slipped 5p to 110p, a 12-month low, following a subdued trading statement. Profit forecasts were pulled back to around £65m from £80m. Last year it achieved £87.8m.