Market Report: Overseas buyers power Footsie past 3,100 mark

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ANOTHER landmark was swept away yesterday as overseas buyers drove shares to further new highs. The FT-SE 100 index roared ahead 21.4 points to 3,100.6 - topping, if only just, 3,100 for the first time.

It was only two weeks ago that the index surged through the 3,000 barrier. So in the first two legs of the traditionally sleepy August holiday account the index has, to the astonishment of most observers, advanced 100 points in often busy trading.

Many had expected shares to drift during what is normally one of the quietest, most uneventful accounts of the year. But trading has often been exceedingly busy, with persistent foreign buying more than making up for any holiday inactivity by British institutions.

US institutional investors have, it would appear, been particularly active, targeting a range of blue chips, including Allied-Lyons, Reuters and Vodafone.

They have been spurred by the huge volume of cash being pumped into US mutual funds. In the first half of the year the funds collected dollars 150bn.

It appears that many US fund managers believe New York is fully valued and that the UK and Europe offer more enticing rewards. The appearance of more US funds specialising in overseas markets is another influence.

European and Japanese investors have also taken a shine to the London market and there is growing wonderment over Nicholas Knight's once seemingly outrageous forecast of 3,500 by the year-end. Many are now nursing a sneaking suspicion that the Nomura strategist's prediction may be attained.

The stock market seems prepared to ignore bad news, such as the Bundesbank's stubbornness over interest rates and a poor New York opening.

It is prepared to accept that company results due in the next few months could be largely disappointing, with groups operating in some of the more hard-pressed industries offering little encouragement.

But any nagging worries were swept aside by the higher growth forecasts by the Confederation of British Industry and renewed interest rate speculation.

Turnover is another positive influence. Allowing for inter-market trading with, for example, market- makers striving to protect their positions, the volume has been remarkably strong.

Government stocks were also rampant, with the talk of France going it alone with an interest rate cut over the weekend inspiring gains of up to pounds 1.50 at the long end of the market.

Among oils Enterprise and Lasmo attracted attention. Enterprise was squeezed 29p higher to 480p, with some bullish stockbroker comments fuelling the advance. Lasmo, up 7.5p to 153.5p, was again spurred by speculation about corporate activity and boardroom changes. Pict Petroleum gained 8p to 134p.

British Aerospace edged ahead 3p to 450p as it appeared to clinch the long-running Taiwan joint venture deal. Foreign shareholders now have 23.77 per cent of the capital. Like Rolls-Royce, it has a 29.5 per cent ceiling. Rolls, up 1.5p to 160p, has already disclosed that overseas shareholdings have had to be pulled back to the 29.5 per cent limit.

There is speculation that the ceiling will soon be lifted in view of the intense overseas interest in the two shares.

Airtours, the holiday group, rose 20p to 399p as Hoare Govett nudged its forecasts higher. It lifted this year's estimate by pounds 2m to pounds 50m and next by pounds 1m to pounds 62m and recommended a switch out of Owners Abroad, unchanged at 84p.

Bass again missed the party as another investment house, James Capel, adopted a negative stance. The shares fell 9p to 502p. Among regionals Mansfield Brewery frothed 16p higher to 216p.

Reuters continued to celebrate the success of its buy-in, rising 31p to 1,555p.

Yield considerations again influenced utilities, although best levels were not held. Ladbroke, with results on Thursday, edged ahead 2p to 204p. The betting and hotels group is the highest yielding Footsie share, and although it is generally accepted that the interim payment will be held there are worries about the group's ability to hold the final.

Financial shares remained in demand as investors contemplated the rich rewards investment houses should be reaping from the market upsurge. ShareLink rose another 4p to 349p and Smith New Court 11p to 338p.

Among banks there were rumours that one securities house, said to be SNC, was urging a switch out of Barclays into Lloyds. Barclays ended 6p lower at 508p and Lloyds 9p better at 559p.

The row over the terms of the Greycoat rescue continued to rumble, with the shares up 3p at 25p. But the preference shares, regarded by some as ill-treated in the Postel reorganisation proposals, were little changed at 46.5p.

The garage and leasing group T Cowie had a bumpy ride, falling 6p to 247p. Turnover was modest.

The fall owed more to expectations of further selling by its founder, Sir Tom Cowie, who retires at the end of the year. He has made it clear that he intends to reduce his 4.69 per cent stake.

Shares continued to advance, with the FT-SE 100 index up 21.4 points at 3,100.6 and the FT-SE 250 index 18.6 higher at 3,513.3. Both indices reached new peaks. Volume was 529.2 million shares, with 35,580 bargains. The account ends on Friday with settlement on 13 September.

Hopes of a takeover bid lifted Anglo-Eastern Plantations 11p to 59p. Chillington Corporation disclosed it was in talks 'with a number of parties' over its 49.2 per cent interest. If Chillington sold it would almost certainly trigger a bid obligation. Anglo arrived on the market eight years ago. Chillington has a spread of agriculture interests as well as engineering operations. Its shares climbed 5p to 39p.

Wiggins, the house builder, is expected to return to market on 1 October. The subject of a company voluntary arrangement in May, the group has raised pounds 7.6m through a placing and rights issue, paid pounds 7.9m for development property at Lincoln and taken options on other properties. The shares were suspended in April, with Wiggins teetering on the brink after running up big losses.