Market Report: Investors tread water on fears of higher US rates

THE spectre of higher US interest rates left a lacklustre stock market feeling miserable and unwanted.

There was no rush to sell; nor buy. In fact, trading was at a low ebb as most investors remained glued to the sidelines, unwilling to take new positions ahead of today's crucial decision on US monetary policy.

A poor New York performance, with Friday's gain obliterated in early trading, added to the gloom, setting the seal on what was a near non-event in stock market terms.

After Friday's sharp fall there was not much left to trim from prices before the Americans act. So the FT-SE 100 index restrained the fall to 20.1 points, resting once again below 3,200, at 3,198.

The weakening Hong Kong share market was another unsettling influence, taking its toll of many shares with Far Eastern connections.

For once in the present uncertainty, government stocks were not a powerful influence. They remained tender, although drawing some comfort from the narrowing in the trade deficit with non-EU countries.

Lasmo, the oil group, was one attacting interest, edging ahead 1p to 131p. Year's results are due tomorrow and some fret about write- downs and even a rights issue.

NatWest Securities forecasts a pounds 19m loss against pounds 385m last time. But the investment house expects the 3.3p a share dividend to be held.

Most oils were firm ahead of the Opec meeting. British Petroleum rose 3.5p to 371p.

British Aerospace and Rolls- Royce also avoided the gloom clouds. Growing expectations of an announcement soon about their foreign shareholding restrictions encouraged the activity.

Overseas shareholders are allowed to hold 29.5 per cent of the capitals; the Government, it is thought, wants to lift the ceiling to 49.5 per cent but there is talk in Brussels that the restrictions should be abolished completely.

There has, it appears, been keen overseas buying of Rolls and some wonder whether the existing limit has not already been broken. On a number of occasions in the past, overseas investors have been forced to sell after the ceiling had been breached.

BAe, which disclosed foreign holdings had reached 27.89 per cent, rose 3.5p to 507.5p; Rolls climbed 3.5p to 192p.

Among retailers WH Smith fell 10p to 514p as Barclays de Zoete Wedd moved from buy to hold; Next eased 2.5p to 220.5p as NatWest went from hold to buy.

Courtaulds, the chemical group, lost 15p to 545p on a rumoured Cazenove downgrading; Carlton Communications dipped 23p to 940p as an unidentified overseas investment house lowered its estimates.

Barratt Developments, the builder, was helped 9.5p higher to 263p by an SG Warburg recommendation.

Media shares were unsettled by talk their outperformance was unjustified. United Newspapers, figures on Thursday, fell 17p to 671p. About pounds 115m against pounds 109.9m is expected.

HSBC felt the impact of the Hong Kong decline, down 27p at 760p. Other casualties on the Far Eastern connection included Standard Chartered, 36p at 1,124p and Cable and Wireless 15p at 426p.

Schroders continued to demonstrate its removal from the 100 index had been premature. The shares gained 24p to 1,193p on further consideration of its results and suggestions it may move to buy full control of its US associate.

It was not a good day for newcomers. Yet Wellington, a maker of seal systems, ended at 217p against a 205p issue and the latest investment trust, Central European Growth Fund, achieved a modest premium with the shares at 63p and the warrants at 21p. The trust will invest in Poland, Hun- gary and the Czech Republic.

ML Laboratories put on 9p to 234p. The European Union is recommending a licence for the group's Icodextrin solution, used in the treatment of kidney failure.

Rodime, a former computer group that is now a play on litigation in the US being successful, fell 4p to 28p after touching 26.5p. Lynx, a computer and playground equipment group, held at 55p. Henderson Crosthwaite placed 1.9 million shares with institutions at 53p.

Savoy 'A' added 10p to 1,125p. Stockbroker Southard Gilbey McNish has been seeking the high voting shares, traded on the backwater Seats market. The price, with at least one trade going through involving BZW, jumped pounds 39 to pounds 100.

Wembley was hit by write- down fears, falling 3.5p to 10.5p; Manchester United fell 21p to 678p on the draw with Swindon Town.

Aminex, the Irish oil group with strong Russian links, retreated 7p to 63p as more investors, it seemed, clutched profits.

The shares were 4p a year ago. As the group's Russian involvement has become more pronounced they touched 100p before giving ground.

Shares of stockbroker Dunbar Boyle & Kingsley will be traded under rule 535 next month. Started six years ago, DB&K is offering its client-shareholders the chance to take profits if they wish. The opening price is expected to be 200p, which would mean the original backers double their money. Stockbroker Raphael Zorn Hemsley arrived under 535 last week at 120p.

Beazer, the house builder split from Hanson, has not received the enthusiastic welcome many expected. The pounds 463m share sale was only 1.3 times subscribed with applicants for up to 105,000 shares getting all they wanted and those seeking more cut to 105,000. Dealings are due to start on Friday. Beazer's lukewarm reception may cool the new issue euphoria.

The FT-SE 100 index finished near its low point of the day, down 20.1 points at 3,198. The FT-SE 250 index lost 11.1 to 3,854.5. Turnover was only 506.3 million shares with 34,659 deals. The account ends on Friday with settlement on 5 April.

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