MARKET REPORT: LVMH expected to turn dry

The FT-SE 100 share index rose 25.7 points to 3,017.3 and the FT-SE 250 index 7.3 to 3,377.7. Share volume was 726.6 million with 21,223 bargains. Go vernment stocks were firm.

The long-running, often confusing relationship between the Guinness drinks giant and LVMH, the French luxury goods group, could be in for another shake-up. Stories flowed in Paris yesterday suggesting LVMH was losing its taste for drink and would be happy to dwell on its baggage, fashion and perfume operations.

Last year Guinness and LVMH reshaped their alliance when the spirit and stout group exchanged its 24 per cent indirect interest in LVMH for a 34 per cent direct stake in Moet Hennessy, LVMH's champagne and Cognac brandy subsidiary. LVMH subsequently reduced its direct involvement in Guinness from 24 per cent to 20 per cent in a £326m share placing through UBS.

The Parisian yarn says Bernard Arnault, chief of LVMH, is prepared to sell the rest of his group's drink interest to Guinness so he can use the cash to develop the group's other luxury goods interests, where he sees considerable opportunities for growth.He is, it is rumoured, taking the view that the champagne and Cognac markets are now too mature to offer much prospect for the type of heady growth he seeks.

The Arnault drink interest is also seen as sitting uneasily with his ambition to become a media tycoon. Selling his remaining interest in LVMH, or cutting his Guinness stake still further, could provide the cash to satisfy his non-drink hopes.

Guinness shares rose 6p to 421p in occasionally busy trading. They were helped by NatWest Securities which, although cutting its profit forecasts, continued to support the shares.

NatWest cut its estimates, largely on the back of the new Irish drinking and driving legislation, from £923m to £911m for last year and from £1,006m to £982m for this year.

The rest of the stock market continued Tuesday's late recovery, gaining 25.7 points to return above the sometimes crucial 3,000 level, reaching 3,017.3.

New York set the tone, producing another firm display on the back of the Mexican rescue package with the Dow Jones Average making further progress in early trading. It was enough, in the absence of any significant domestic news, to provide the spur the markets needed.

The expected US interest rate increase came after the market closed. It could push today's "Ken and Eddie" meeting towards another UK advance.

Take-over speculation flickered again. In late trading Kleinwort Benson and SG Warburg attracted buyers.

Kleinwort, which denied any bid involvement on Friday and sent its shares tumbling from 663p, rose 25p to 624p.

Observers are taking the view that quick return speculators must by now have been shaken out, and the latest buying has an informed look. Warburg gained 16p to 757p. TSB was another back in form, up 5p at 243p. Lloyds Abbey Life slipped 7p to 352p as it said it was not in talks with controlling shareholder, Lloyds Bank. There was, perhaps significantly, no statement from Lloyds, up 6p to 545p.

Although it is fashionable to rubbish takeover stories, it is interesting that many of the shares in recent bid excitement have recovered from their post-denial lows, adding support to the widely held view the market is set for a year of mega bids.

Wellcome, fighting a near £9bn offer from Glaxo, rose 11p ton 998p on indications of further support for the effectiveness of its Retrovir aids drug when used in connection with a Glaxo product. Glaxo rose 8p to 626p. SmithKline Beecham advanced 16p to 471p with an unidentified US recommendation said to be responsible.

Vodafone, regarded as a long-term target for the US giant AT&T, misdialled when it said many analysts were expecting too much from the mobile telephone group. Business, it said, continued to boom. But the rush of new subscribers would take its toll of this year's profits, estimated at around £395m. The shares, with Seaq putting turnover at nearly 66 million, fell 5.5p to 182.5p.

Electricities were subdued by reports that the industry regulator, Professor Stephen Littlechild, had made the remarkable proposal that 25 per cent of Northern Electric's shares should be refloated if Trafalgar House won control. Northern fell 26p to 944p.

Nurdin & Peacock, the cash and carry group where profits are under intense pressure, attracted bid talk, with the shares up 10p to 153p in relatively busy trading. SHV, the Dutch investment group which owns the Makro cash and carry chain, has a 14 per cent stake and would be the obvious candidate to take N&P out of its misery.

Caradon, the building materials group, enjoyed a late run as Barclays de Zoete Wedd turned positive on the sector. The shares gained 8p to 235p.

House builder Bellwinch picked up 3p to 36p, anticipating encouraging interims and possibly a dividend this month.

Tomkins, the engineering to food group, rose 7p to 229p, following its application to list its ADRs on the New York Stock Exchange. They have been on Nasdaq since 1988.

Costain, the troubled builder, rose 2.5p to 22.5p with Seaq putting turnover at nearly 18 million shares. The rumour causing the excitement was that Hanson, the market's bidder for all seasons, was about to strike. But Costain, priced at £101m, hardly represents the big investment opportunity that Lord Hanson, the chairman, yesterday told shareholders he was seeking.

Perkins Foods rose 1p to 65p but remains perilously near its year's low. The group is deeply involved in the Netherlands and could suffer extensively from the floods. In 1993 it achieved most of its profits there with sales of £221m. The floods should not influence last year's profits; about £21m is expected. But this year's £23.5m estimate may have to be revised.

Suggested Topics
PROMOTED VIDEO
News
video
Life and Style
tech
Arts and Entertainment
Southern charm: Nicolas Cage and Tye Sheridan in ‘Joe’
filmReview: Actor delivers astonishing performance in low budget drama
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
film
Arts and Entertainment
Up my street: The residents of the elegant Moray Place in Edinburgh's Georgian New Town
tvBBC's The Secret History of Our Streets reveals a fascinating window into Britain's past
Extras
indybest
News
Albus Dumbledore, the headmaster of Hogwarts School of Witchcraft and Wizardry has been the teaching profession's favourite teacher
education
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Luis Suarez looks towards the crowd during the 2-1 victory over England
sport
Life and Style
Cheesecake frozen yoghurt by Constance and Mathilde Lorenzi
food + drinkThink outside the cool box for this summer’s frozen treats
News
John Barrowman kisses his male “bride” at a mock Gretna Green during the Commonwealth Games opening ceremony
peopleBarrowman's opening ceremony message to Commonwealth countries where he would be sent to prison for being gay
Sport
Sir Bradley Wiggins removes his silver medal after the podium ceremony for the men’s 4,000m team pursuit in Glasgow yesterday
Commonwealth games Disappointment for Sir Bradley in team pursuit final as England are forced to settle for silver
Sport
Alistair Brownlee (right) celebrates with his gold medal after winning the men’s triathlon alongside brother Jonny (left), who got silver
England's Jodie Stimpson won the women’s triathlon in the morning
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Junior Research Analyst - Recruitment Resourcer

£18000 - £20000 per annum + OTE £25K: SThree: SThree Group has been well estab...

Senior Analyst - Financial Modelling

competitive: Progressive Recruitment: This really is a fantastic chance to joi...

Associate CXL Consultant

£40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

Business Anaylst

£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...

Day In a Page

Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform