Market Report: Kingfisher tormented by fear of French bears

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THE BEARS, who have frequently tormented Kingfisher this year, have found a new gloom story to peddle around the stock market.

The shares fell 17p to 572p on fears of French selling next month. It could come from former shareholders of Darty, the French electrical retailer acquired last year in a pounds 1.1bn deal.

Part of the consideration was paid in Kingfisher shares, with strict conditions imposed on their sale.

The first block, representing more than 20 million shares, could be unloaded next month.

The fear that the French were anxious to switch their shares into cash was strengthened by indications that a leading securities house, thought to be Swiss Bank Corporation, had tried to encourage them to sell.

It was unclear what sort of price was offered. There was speculation whether SBC planned a simple buy- and-sell deal or intended to use the shares in a derivative exercise.

Sources close to Kingfisher, however, believe the French shareholders are unlikely to sell.

Kingfisher shares peaked at the start of the year when they touched 778p. Since then they have been plagued by a number of stories, including rumours of problems at the B&Q do-it-yourself chain.

The rest of the market, helped higher on Tuesday on hopes of a German interest rate cut, decided to ignore the reduction when it actually occurred.

Instead it tended to fret about the Bank of England's stern warning on domestic inflation and interest rates. Government stocks, however, were more positive, ending higher by up to three-quarters of a point at the longer end of the market.

The Bank's warning certainly produced a demolition job on building and building material shares. Other interest rate-sensitive shares were subdued.

Among builders, Barratt Developments fell 10p to 212p; Westbury 17p to 166p and George Wimpey 8p to 179p. The recent building newcomer Beazer, sold at 165p, fell 9p to 149p, and Wainhomes, offered at 170p, dropped 5p to 149p.

On the building materials pitch Heywood Williams retreated 17p to 381p; Pilkington 5p to 185p and Ibstock Johnsen 9p to 72p.

BPB Industries and RMC had to contend with additional uncertainty created by expansion moves by Lafarge, the French group, which were seen as possibly increasing cement and plaster board supplies. The company said it planned a 'large industrial investment' in eastern Germany.

It was enough to send BPB down 19p to 304p and RMC 22p to 852p.

British Aerospace continued to benefit from its two-day presentation to analysts. The shares, also enjoying support from the Airbus Industrie dollars 1bn Canadian order, rose 23p to 499p.

Lasmo continued to meet demand, as speculators banked on a counter to the Enterprise Oil bid or an alternative cash offer from Enterprise. The shares edged ahead another 2.5p to 154p; in contrast Enterprise fell 7p to 440p.

J Sainsbury's results provided some support for food retailers. Asda moved up 2.5p to 59p and Tesco 7p to 235.5p. Sainsbury, strong ahead of its figures, improved a further 7.5p to 399p.

The day's best gain was scored by the engineer Linread, up 63p to 216p, on the surprise bid from McKechnie, down 13p at 474p.

Johnson Group Cleaners crashed 64p to 908p following a warning that profits were running below last year's level but Micro Focus, the computer group, jumped 242p to 1,065p on a more encouraging first-quarter statement.

Royal Bank of Scotland's fine interim figures were not good enough to deter profit-taking and the shares fell 12.5p to 428p. Standard Chartered, its new slimline form, rose 21.5p to 259.5p.

The shares were helped by the improving Hong Kong market, which also encouraged HSBC 7p higher to 731p.

Cable and Wireless appeared to be restricted by competition worries in the telecommunications industry. The shares had to be content with a 2p gain to 465p. BT and Vodafone gave ground.

Utilities were generally firm; British Gas was little changed at 297p.

Control Techniques, the maker of drive systems, stretched 3p to a peak of 497p. The company is trading well but there is speculation that a bidder may hover. Some wonder about the intentions of Eurotherm, down 1p at 450p.

Northern Leisure, the reviving discotheque group, gained 7p to 56p. It is raising pounds 4.8m through a convertible loan stock issue and has set up a new agreement with its bankers. The sale of its nursing homes for pounds 1.9m has already been announced.

Speculative interest drove Hawtal Whiting, an automotive design engineer, 11p higher to 75p. Figures are due.

Stanley Leisure, the Liverpool- based betting shop and casino operator, which should be a beneficiary of Sunday betting, galloped 9p to 315p. Barclays de Zoete Wedd was responsible for the advance. The securities house lifted its profit forecast for the year just ended from pounds 11m to pounds 11.6m and this year's estimate from pounds 13.3m to pounds 14.1m. In 1993 the group produced pounds 8m.

Mid-States, a motor parts distributor in much of the American Mid-west, attracted attention, with Seaq recording turnover of 1.4 million shares. It was suggested positions were being created ahead of its issue of ADRs, scheduled for June. The price was little changed at 104p. The last results were distorted by one-off charges, which masked a 40 per cent EPS growth.