Market report: Lasmo shares rise as oil predators circle

LASMO, the oil group cuddling up to Enterprise Oil, may be in the sights of a Continental predator.

The shares flared 14p (after 20.5p) to 118.5p in busy trading as stories swirled that Repsol, the Spanish oil group, and ENI, the Italian operator, could be planning takeover shots. BG, the old British Gas, was another in the frame.

ENI refused to comment about Lasmo although it did deny weekend reports it was set to descend on Enterprise, up 10.25p to 234.5p.

Last month Enterprise and Lasmo admitted they were talking merger; they also said they were in discussions with other parties. There were suggestions in some quarters that the merger negotiations were near to breaking down but sources close to the companies said they were on the verge of being successfully concluded.

The slump in the crude oil price has devastated the industry; it was a major influence in British Petroleum's merger with Amoco, creating Britain's biggest company, representing 6 per cent of the Footsie index.

Shares of Enterprise and Lasmo have crashed. Eighteen months ago Enterprise was riding at 729.5p; last year Lasmo almost reached 300p.

Four years ago Lasmo, after a furious takeover battle, managed to resist a bid from Enterprise which was left with oil all over its corporate face. Lasmo is not thought to be over-keen on surrendering its hard-won independence to Enterprise so soon after its famous victory. It is felt if another company shows sufficient interest, it would be anxious to talk.

The stock market had another busy, if lacklustre, session with turnover again topping 1 billion shares. Footsie sadly lacked inspiration, ending 20.4 points lower at 5, 834.9. Even the mid cap index faltered but the small cap again kept the flag flying with a 7.2 advance to 2,217.1.

Bids and deals again contributed to the proceedings. Ladbroke galloped 38p to 269p in response to its agreed cash and shares take over of Stakis, the casino and hotel chain. Stakis, on hopes of a counter bid, rose 16p to 157p.

The deal filtered through to bewhiskered old bid favourite First Leisure, up 10p at 218.5p, but Northern Leisure, strong last week on speculative talk, fell 11p to 137.5p.

BT's Internet deal with Microsoft lifted the telecom group, said to be about to strike at a Dutch telephone company called Equant, 7.5p to 935p. Renewed talk that ScottishPower planned to demerge its telecom side pushed the shares 7p higher at 607p.

Sun Life & Provincial fell again - 9p to 482p. The insurer's steady decline has reduced the value of its bid for GRE, off 2.5p at 351.5p. There are suggestions Royal & Sun Alliance, off 4.25p to 475p, may soon be tempted to roll out a hostile bid if the Sun takeover price continues to drift lower.

Rebus, a computer group, gained 18p to 177.5p after a Bermudan investment group, which in a raid picked up nearly 30 per cent of capital, mounted an agreed bid. Pycraft & Arnold, a loss adjuster, rose 15p to 68.5p after reporting a bid approach but warning any offer would not be much above 53.5p.

Limelight, the bathrooms and kitchens group where a bidder lurks, edged ahead 4.5p to 47p but taxi-maker Maganese Bronze, denying reports of an offer, lost an early 29p gain to end unchanged at 266p.

GB Railways, at one time around 180p higher, ended 14p ahead at 157.5p after denying bid talks. First Group was said to be the interested party.

The bid ferment continued among pub companies. Cafe Inns frothed ahead 20p to 224p after admitting bid talks, thought to be with Century Inns, 6p up at 122.5p. Pubs 'n' Bars duly confirmed it was in talks to buy unquoted pub chains and rose 2p to 52p.

Showbiz group EMI was at one time up 20.25p on a report of Rupert Murdoch interest; the price closed up just 3.25p at 453.75p.

Engineer FKI hardened 11.5p to 175p on suggestions of a 200p a share management buy out led by chairman Jeff Whalley. WestLB Panmure believes a fair value level is 250p. And talk of corporate developments at Debenhams, the department stores chain, produced a 9.5p gain to 423.5p, just below the peak.

Away from bids and deals RMC, the building materials group, ended 7.5p lower at 750.5p after a rogue trade, subsequently cancelled, had briefly smashed the price to 651.5p.

Gallaher, the cigarette group, fell 10.5p to 414.5p as its Royal Warrant went up in smoke but glass-maker Pilkington rose 7p to 71.5p as bid talk continued.

Banks were weak ahead of their profits season with National Westminster off 30p to 1,144p. But utilities returned to favour with investors encouraged by their safe haven status and dividend yields. Thames Water splashed 42p higher at 1,099p. Mining shares also came in from the cold. Billiton rose 11p to 126p and RioTinto 39p to 790p. Lonrho gained 10p to 355p. Deutsche Bank upgraded Rio to out-perform claiming that high quality miners are coming back into vogue. Firmer metal prices were another influence.

Scotia rose 29p (after 37p) to 98.5p following the after clinching of a deal with US food giant General Mills to sell its Olibra weight control product; the shares were once 800p.

Comino, a computer group, logged a 22.5p gain to 225p after Peel Hunt suggested a 280p target and forecast profits of pounds 2.7m (pounds 2m) for the year ending next month.

Hornby, the toy-maker, held at 163.5p after Hill Samuel sold 990,000 shares, representing 11.8 per cent of the capital. It is left with 1.9 per cent.

NSB Retail, offering computerised retail systems, rose 27.5p to 262.5p after Teather & Greenwood suggested profits reached pounds 1.8m last year; will hit pounds 2.9m this and pounds 5.1m next.

On the Ofex market EasyScreen, providing dealing systems for futures and options markets, had another rip roaring session, up 145p. Shares were floated last month at 167p.

YET ANOTHER share index is likely to appear, possibly in the fullness of time challenging the dominance of Footsie. The creation of oil goliath BP Amoco and the growing integration of world stock markets has prompted thoughts that there is a need for an index covering the mega, multi-national groups. BP Amoco, Footsie's biggest constituent, has a value of pounds 87bn with its shares held fairly equally between British and United States investors.

SHIELD DIAGNOSTIC shaded 10p to 460p. There are worries that its proposed merger with Axis Biochemicals is running into difficulties. But the group said it was still talking to the Norwegian group and a merger agreement should be struck later this month. As part of the tie-up, Shield is likely to have to raise up to pounds 12m, probably through a rights issue. The shares hit 550p when the deal was announced last month.

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