Market Report: Property shares show 1980s-style vigour

IT'S BACK to the good old days for property shares. They are enjoying the sort of attention last seen in the heady days of the 1980s as the stock market detects the end of the deep depression that has devastated the industry.

Properties have performed well this year, but since Land Securities produced mildly encouraging figures and forecast an improving property market last week progress has been heady. Sentiment has also been helped by higher asset estimates and optimistic noises from a number of stockbrokers, particularly James Capel.

Yesterday Land Securities, the UK's biggest property group, rose 9p to 574p. The shares have climbed 29p since the results.

Others to move ahead included British Land, touching 317p and closing at 314p, a 46p advance since the LandSecs statement; Great Portland, up 6p at 190p, a 23p gain; MEPC 7p at 437p (31p) and Scottish Metropolitan 9p at 78p (22p).

Even the pounds 100.7m Brixton Estates cash call failed to ruffle the market. Indeed Brixton ended 11p higher at 207p. Slough Estates has been buoyant since it tapped shareholders for pounds 147m with a rights at 150p in March. The shares jumped 10p to 219p. They were 178p when LandSecs pronounced.

In such excitement, talk of takeover bids is in the air. Hammerson, which produced poor figures, remains the market's favourite. But some of the smaller fry are beginning to attract attention. Trafford Park Estates, the Manchester group that weathered the downturn better than many, is one to appeal to speculators, up 7p at 70p.

Dencora, thought to have been overlooked in the rapid re-rating, jumped 17p to 125p. UK Land, another laggard, advanced 6p to 28p.

The shipping group P&O, with its building and property interests, enticed buyers, up 11p at 603p.

But the property euphoria did not spread to the rest of the market on the last day of the account. The FT- SE index, measuring the top 100 shares, had a see-saw session, closing 4.6 points down at 2,812.2. However, the second-liners were again in demand. The FT-SE index, representing the next 250 shares, reached yet another peak, up 5 at 3,165.1.

In the account the FT-SE 100 index climbed 18.5. The FT-SE 250 advanced 55.4.

The index, produced by Pearl Assurance, suggests that investor confidence is still growing. The May soundings put its confidence factor at 94.8 points, up 4.2. It is at its highest since last year's Tory election victory sent investors rushing into the market to send prices soaring.

Chemical shares were weak, disturbed by the bleak comments from Brent Chemicals. Courtaulds fell 10p to 517p and Laporte 6p to 607p. Burmah Castrol lost 15p to 688p. Hickson International, with the added anxiety of the resignation of the managing director of its fine chemical division, lost 6p to 230p. Brent, down 30p on Thursday, rose 3p to 102p.

Beers steadied. Bass regained early falls to close 2p higher at 464p. Whitbread 'A' put on 7p to 475p.

London International Group lost 7p to 178p on the outbreak of a condom price 'war'.

Foods had another uncomfortable session. Cadbury Schweppes remained weighed down by rights issue fears and the possibility that it will mount a bid for United Biscuits. The shares fell 8p to 414p, a two-day decline of 22p. UB lost 7p at 396p.

Saatchi & Saatchi gained 15p to 182p as investors warmed to its pounds 73m rights issue. British Airways, with a pounds 442m cash call under way, improved 8.5p to 309.5p. But Compass Group, with an pounds 86.8m rights, fell 8p to 497p.

Boots, down 11p at 435p, was hit by a profit downgrading by Morgan Stanley. The forecast for the current year has been lowered pounds 10m to pounds 445m. The deepening price 'war' with Kingfisher's Superdrug chain and poorer weather are among the influences that have prompted the revision. Nick Bubb, an analyst, said: 'Current trading is pretty flat.' He felt the shares could come under pressure as worries about the drugs division mounted following the difficulties with Manoplax, the heart treatment.

Boots is due to announce last year's results early next month. NatWest Securities expects pounds 410m, up from pounds 359.5m.

Cannon Street Investments reached 29.75p, up 3.75p, on disposal hopes.

The account ended with blue chips lower but second-liners at a new peak. The FT-SE 100 index lost 4.6 points to 2,812.2 and the FT-SE 250 index rose 5 to 3,165.1. Turnover was 699.2 million shares with 33,158 bargains. Government stocks were little changed.

Owen & Robinson, the struggling jeweller where new management moved in a year ago, is being rescued by a capital reorganisation that includes its main banker exchanging debt for equity and a placing and open offer to produce pounds 2.1m. The group wants to expand its jewellery and sports footwear operations. The shares took the dilution badly, crashing 6p to 3p. At one time they were down to 2p.

More sobering news for the drinks industry is due next week. Macdonald Martin Distilleries, the family-controlled group famed for Glenmorangie malt whisky, is expected to disclose that the year's profits have crashed from pounds 8.6m to pounds 4m. The group has had problems with its bulk and own-label operations. The shares are weak, with the low-voting 'A' shares near their year's low at 388p.