Reckitt & Colman and Commercial Union provoked the rights issue speculation. The healthcare group was said to be preparing to tap shareholders to pay for a big US acquisition and the insurer CU was rumoured to be putting the finishing touches to its long-awaited cash demand to help towards the acquisition of the French Groupe Victoire.
CU has made no secret of its intention to raise some pounds 500m of the near- pounds 1.5bn cost of the Victoire deal from shareholders. It has, by delaying the call, run the risk of short selling, making the rights more difficult to accomplish.
But, with the deal winning widespread stock market support, its shares have held up well, allowing a reasonable gap for a realistic call.
The shares, resisting the normal pattern just before a rights issue, moved ahead 2p to 552p. But Reckitt adopted a more traditional response, falling 7p to 614p.
The story going the rounds was that it was near to clinching a US healthcare deal, costing about pounds 1.3bn.
Reckitt already has extensive US interests and is thought to have long wanted to increase its transatlantic healthcare exposure.
Tiphook, the container group where rights fears also hover, held at 34p as it said its results would be announced on Thursday.
The rest of the market shrugged off some hefty dividend payments and the FT-SE 100 index ended 4.4 points higher at 3,171.9.
But, once again, much of the action occurred outside the privileged ranks of the Footsie constituents. The supporting FT-SE 250 index gained 13.8 to 3,728.7. It has moved ahead in the last six trading sessions, gaining nearly 90 points as fund managers have decided that some of the non- Footsie stocks offer the best value.
Equities were helped by a firm New York display and gains by government stocks, encouraged by the latest Whitehall figures, which indicated little pressure on inflation.
Electricities were mostly higher ahead of this week's new controls from Offer, the industry regulator. It appeared that UBS was adopting a more negative stance than many other securities houses, which tend to believe the Offer charge will be weaker than had been envisaged.
Charter, the industrial group bidding for Esab of Sweden, had an uncertian session, closing 1p lower at 736p. The Swedish operation is likely to produce higher than expected profits, which could force Charter into increasing its pounds 260m offer quite substantially.
BAT Industries fell 20p to 427p, with its dividend payment responsible for 8.5p of the decline.
Two stories went the rounds. One said the powerful US Food and Drug Administration was about to reclassify nicotine as a possibly dangerous drug; the other related to BAT's alleged super tobacco plants, which have already created indignation in some sectors of the FDA.
Allied-Lyons rose 4p to 597p. It is said to have turned down a pounds 400m offer from Nestle, the Swiss group, for its Tetley tea business.
Vickers, the Rolls-Royce cars group said to be on the verge of an engines deal with Mercedes, advanced 7p to 195p.
Some newspaper shares were again jittery as the price-cutting turmoil continued to take its inevitable toll. United Newspapers tumbled 24p to 505p and the Telegraph 10p to 357p. But Mirror Group Newspapers overcame early weakness, ending 3p higher at 131p. Reed International, helped by US house Lehman Brothers, put on 5p to 825p.
The advertising group Saatchi & Saatchi celebrated better- than-expected results with a 15p gain to 176p. WPP rose 3p to 111p in sympathy.
British Airways dipped 12p to 417p on disappointing first-quarter results, although there was talk of year's profit forecasts being upgraded.
Acatos & Hutcheson, the edible oils group, gained 19p to 335p as an unidentified supplier agreed to take a 22.5 per cent stake; Waterhouse, which fits out offices, surged 17p to 58p after it became known a Hong Kong group had paid 65p a share for a 29.9 per cent interest.
Mid States, running car part centres in the US, gained 3.5p to 90.5p as it appeared that a suspected 3.5 million stock overhang had been cleared.
Kevin Leech, chairman and creator of ML Laboratories, has moved in on the leisure tiddler, Flagstone. He has acquired a 20 per cent stake from Channel Islands entrepreneur David Kirch, who retains 9.9 per cent. Mr Leech, who becomes chairman, has an extensive portfolio of leisure interests. Flagstone, owning the Needles pleasure park on the Isle of Wight, rose 0.25p to 2p.
Inevitably, Tullow Oil, where the hope factor looms large, disappointed when it produced its statement on drilling in Pakistan. In contrast to rumours of a big hit, Tullow cautiously suggested 'a possible commercial discovery'. The shares, in busy trading, fell 3.5p to 45p and there was talk of them sinking to the mid-30s until more positive news emerges from the drilling front.
The FT-SE 100 index rose 4.4 points to 3,171.9 and the supporting FT-SE 250 index improved 13.8 to 3,728.7. Turnover was a limp 547.3 million shares with 28,206 bargains clocked. Government stocks scored gains of up to half a point.
(Graph omitted)Reuse content