Market Report: National Power bleeds despite talks of a dawn raid

National Power could be the subject of a dawn raid today. The story swirling around the stock market in late trading was that Southern Company, the American group that wrong-footed the alleged experts with its declaration of affection for NP last week, had decided to plough into the market, regardless of the Government's rejection of NP's Southern Electric takeover bid.

Although US regulatory restrictions could prevent an early Southern strike the market was not prepared to dismiss the rumours. It was uncertain whether the shock intervention by Board of Trade president Ian Lang ended Southern's acquisition hopes. Surely, it was argued, if some generator excursions into distribution were allowed Southern must have a chance of competing for NP.

When the NP affair flared it was said Southern was prepared to sell around half of its UK electricity distributor, South Western Electricity. Whitehall could have difficulty dismissing Southern's NP ambitions if it downscaled its distribution involvement.

In all the excitement the smell of burnt fingers continued to waft around the market. NP fell a further 8p to 556p and PowerGen 15p to 555p.

Some of the distributors perked up as PG underlined the market's feeling that Mr Lang's decision to block the NP & PG bids for Southern and Midlands Electricity left the distributors at the mercy of overseas marauders.

Most distributors advanced with the market convinced the electricity battle remains alive and dangerous.

Trading, Mr Ian Lang's shock statement, has been heavy and speculators have suffered serious losses.

The FT-SE 100 index, after an uncertain run, managed to end with a modest gain, up 1.7 points at 3,819.3. The supporting index was again on a roll, up 8.6 to another peak of 4,553.3.

The outstanding performer of the day was not big enough to claim membership of either index. Chiroscience, with a stock market value of around pounds 300m, surged 117.5p to 400p.

The excitement stemmed from an analysts meeting at which upbeat comments were made about the group's drugs pipeline, including its cancer drug. It has apparently created a number of compounds which could have cancer uses. What intrigued many was the suggestion Chiroscience had developed compounds superior to those being produced by high-flying rival British Biotech, due to make an important presentation next month. Biotech took the competition in its stride, up a further 48p to a peak of 2,808p.

Granada was squeezed ahead 2p to 842p as the sale of the Forte Meridien hotel chain looked near. Accor, the French group, decided to make it known it had put together the resources to buy Meridien. Gerard Pelisson, joint chairman, said: "We are still awaiting Granada's offer terms but when they come we will be among the most interested parties."

To honour its commitment to slash its Forte debt mountain by September Granada could feel a Meridien sale is its best option. The 86-strong chain, which has also attracted former Forte chief Sir Rocco Forte, should be worth more than pounds 700m.

Stories Hanson was on the verge of selling its stake in National Grid failed to be substantiated and Grid shares fell 3.5p to 198p.

Imperial Chemical Industries' flat quarterly results - and its failure to acknowledge any share buy-back plans - left the shares nursing a 28p fall to 926p. Rolls-Royce drew strength from its US presentations, climbing 3p to 244p.

Perpetual, the fund management group, was back in the limelight with a 132p gain to 2,345p. It was the usual mix of bid rumours, a German strike, or perhaps more fundamental considerations, such as buoyant unit trust sales. However, the price war instituted by Legal & General could be seen as a likely constraint on Perpetual's seemingly relentless growth.

Ibstock's emergence as an important bricks player lifted the shares 11p to 85.5p. Greenalls, on the Panmure Gordon recommendation, gained 13.5p to 629.5p.

Ladbroke remained a centre of attraction although the failure of the long mooted bid left the shares nursing a 2.5p fall to 203p. Turnover was again heavy, signalling that some sort of action may not be far away.

It is difficult to imagine how much longer the Ladbroke saga can continue. Presumably it has yet to collect a bid, otherwise it would be bound to make a statement. So it must be assumed that its talks with Hilton Hotels Corporation are behind the shares'strength.