Market Report: Peps and rate hopes light fire under Footsie

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BLUE CHIPS again stretched to new highs, inspired by merger talk and hopes of another interest-rate cut.

New York's Easter Monday parade and the late stampede into personal equity plans were other factors as Footsie jumped 85.3 points to a 6,415.3 closing peak. At one time it was up 113 at 6,443.9.

The climb through the 6,400 barrier had been widely expected, with much of the pent-up Peps excitement seemingly flowing directly through to blue chips.

But one again it was a market of two distinct halves. The mid cap and small cap indices were accorded only grudging progress in the rush to embrace Footsie constituents. But government stocks were strong, scoring gains of up to one point.

Dixons, the electrical retailer, led the Footsie charge, up 111p to 1,416p, a peak. The Internet connection remains the spur with some City analysts talking the shares up to 2,000p. In the past 10 months Dixons has climbed from 477p. Others surfing on the World Wide Web made headway; WH Smith was one, up 28p to 700p.

Telecoms were also back on the high wire, with BT enjoying a 54p surge to 1,082p. Telewest Communications improved 19p to 296.25p as the long- simmering story that it may merge with Cable & Wireless Communications was given another twirl.

US takeover activity is behind the speculation. MediaOne, a major shareholder in Telewest, is involved in a pounds 37.5bn merger with Comcast and is thought to be keen to realise some of its British assets.

The latest story, which the two companies seemed to support in a statement after the market closed, is that Cable & Wireless Communications (CWC), the separately quoted cable company controlled by Cable & Wireless (C&W), will sell assets to Telewest, with C&W retaining the rump of CWC.

It seems Telewest would acquire the business operations, with CWC holding on to the residential side. Such a deal would probably involve C&W taking full control of the communications operation, where it has a 53 per cent interest.

But C&W's joint mobile phone venture with MediaOne, the One2One network, could also be up for grabs. The two groups have agreed to undertake a "strategic review" that could lead to a takeover or flotation.

C&W, which could also soon face corporate decisions over its Hong Kong Telecom off-shoot, rose 23.5p to 775.5p; CWC gained 36.5p to 754.5p. The latest mobile phone figures also helped sentiment, with Vodafone 24p up at 1,206p.

Talk continues of a Footsie constituent being embroiled in bid action soon. EMI, the showbiz group, is emerging as the popular candidate for corporate attention, and the shares put on a further 29.25p to 488.75p. On Thursday Sutherlands said the shares were a buy.

Unfashionable Monument Oil & Gas was also in the takeover spotlight with Enterprise Oil and Lasmo, which have failed to agree on their own merger, said to be eyeing the group. Monument, which has admitted predatory interest, gushed 5p to 47.75p. BT Alex.Brown believes Monument's asset value is 73p a share. Lasmo fell 1p to 127.75p and Enterprise rose 5.5p to 364.75p. The possibility that BG will be tempted into striking out at Monument lowered its shares 15.5p to 353p.

Ulster Television gained 8p to 184.5p; the shares are a long way from their 247.5p peak hit earlier this year. Canwest International Communications has 30 per cent and could, believe some, strike out for full control.

Pilkington, the glass group, continued to retreat as the latest takeover speculation receded. The shares fell 2.5p to 74p in brisk trading. Last week rumours swirled, not for the first time, of a bid from the French Saint Gobain giant, but a French denial of any bid intention sent hopeful punters scurrying for cover.

Real as opposed to rumoured bids did materialise. Tie Rack, which has fallen out of fashion, is tying the knot with an Italian group. The well- signalled deal pushed Tie Rack 7.5p higher at 42.5p. Cleveland, a property group, fell 6p to 110.5p as Ashtenne, unmoved at 142.5p, unfolded a 111p agreed offer. Greycoat was little changed at 216p as hostile bidder Delancey Estates declared a 10 per cent shareholding.

AstraZeneca, the new Anglo-Swedish drugs group, made a disappointing debut, down 91p to 2,946p. The merger was accepted by Astra shareholders with 96.4 per cent of the Astra votes. But Warburg Dillon Read was unimpressed by the share price of the new drugs giant, suggesting it should be 2,600p.

Marks & Spencer, up 30.75p to 436.25p, was supported by CSFB's decision to move the shares into its European top 30 portfolio, but other retailers were less confident, with Great Universal Stores losing 38p to 637.5p.

Granada firmed 25p to 1,239p after Goldman Sachs lifted its profits forecast from pounds 770m to pounds 785m.

Jarvis, the construction and railway maintenance group that has enjoyed an astonishing run, was shunted into the sidelines after a surprise profits warning. The shares reversed 64.5p to 478p with Peel Hunt cutting its profits forecast from pounds 62.7m to pounds 56m. The shares peaked last summer at 787.5p; they were 4.75p four years ago.

Springwood, the leisure group that has been moved into the pubs and restaurants sector under the reclassification, enjoyed its new surroundings, climbing 16p to 108.5p. Burnden Leisure, the Bolton Wanderers football club group where there is talk of a move to go private, fell 1.5p to 18.5p as Premiership promotion hopes suffered a setback.

AB Airlines, where there is talk of corporate action, climbed 3p at 36.5p, and engineer Frederick Cooper hardened to 44p on reports of a management buyout.

VFG, the film and video facilities group raising up to pounds 10.75m for expansion in Australia, held at 52p although Teather & Greenwood rate the shares a buy. It forecasts profits more than doubling to pounds 2.5m this year, reaching pounds 3.6m next and going to pounds 4.7m.


SEAQ TRADES: 104,348


WIGGINS, the property and construction group that plans to become a force in the airports industry, climbed 1.75p to 16.75p, a new peak.

There is talk that it is on the verge of flying in another big-name partner to help its airports development. It has already linked up with Thomson CSF, the French group, to run four airports.

Wiggins also takes in Manston Airport in Kent and has interests in the United States.

JOHN FOSTER, the struggling textiles group that has property attractions, weaved a 3.5p advance to 10.5p.

The arrival of David Cooper and Simon Hathaway, joining the board and paying 13p for 225,000 shares, prompted the excitement. IAF, the financial group, has sold its 22 per cent interest in Foster.

In the half year to last August, Foster lost pounds 409,000 and it said losses were continuing into the second half of the year.