Market Report: Rights fears pull Footsie back from the peak

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The Independent Online
FEARS of a huge rights issue unsettled shares yesterday, halting - at least for the time being - the stock market's record- breaking run.

It is widely believed that Vickers, the engineering group of Rolls-Royce car fame, will accompany today's figures with a pounds 100m cash call. But many are looking for a much more substantial rights demand.

With shares riding high there is a strong temptation for companies to repair their ravaged balance sheets or seek cash for a significant acqusition.

Although a steady flow of cash calls has been witnessed this year, surprise has been expressed that more companies have not tapped such a strong and seeming resilient market.

In such a climate it is relatively easy to promote rights rumours that have a telling impact.

Most of the well-worn candidates were trotted out. British Petroleum, which has attracted an increasingly strong US following, was back in the frame.

Glaxo Holdings and National Westminster Bank were others. Even the food and drink group Allied-Lyons, which has denied rights ambitions, was put forward as a candidate.

BP fell 2.5p to 287.5p, Glaxo rose 14p to 666p, NatWest fell 7p to 447p and Allied lost 6p to 587p.

So an early 23.6-point advance, which created a new trading peak of 2,980.9 for the FT-SE 100 index, petered out, leaving the indicator 7.4 down at 2,949.9.

The Government's embarrassment over the Maastricht vote and suggestions in Germany that there was no longer scope for next week's widely predicted interest rate cut underlined investor nervousness. US selling was another bearish factor.

However, Smith New Court, the securities group which should have been a significant beneficiary of this year's intense market activity, climbed 8p to 168p, highest since 1988.

Today's expected meeting of the FT-SE indices committee also created anticipatory interest. Asda was heavily traded, with Hoare Govett saying the shares were a buy. The revitalised supermarket chain is regarded as a likely FT-SE 100 recruit. The shares rose 1.5p to 69.75p.

Beers were mixed, with Bass losing an early gain after James Capel did a downgrading. The broker has cut this year's forecast by pounds 40m to pounds 560m and next year's by pounds 30m to pounds 620m. The shares ended unchanged 593p.

Scottish & Newcastle and Whitbread 'A' continued their tandem advance - Scottish up 9p to 465p and Whitbread 3p stronger at 488p.

The timber group Meyer International lost 10p to 318p. Barclays de Zoete Wedd downgraded. It cut from pounds 15m to pounds 11m and from pounds 19m to pounds 18m. BZW also lowered its Hanson forecast from pounds 1,275m to pounds 1,195m and suggested the shares were a hold.

Standard Chartered, another rights candidate, was ruffled by stories that today's figures could feature bigger-than-expected provisions. The shares fell 8p to 691p. The provisions, relating to the Bombay securities scandal, are rumoured to reach pounds 250m.

The specialist printer De La Rue slipped 4p to 680p. Hoare has upgraded from pounds 96m to pounds 101.8m.

Geest, the fresh food group famed for bananas, jumped 19p to 472p on stories that the US Dole group was preparing to pounce. Geest refused to comment. The price ended at 466p.

Euro Disney put on 65p to 1,080p. The market expects a pounds 120m loss for the year. Tomorrows Leisure, running the 88- acre Pleasure Island leisure complex in Liverpool, tumbled 4p to 22p as it warned it would suffer a pounds 1m-plus loss in the year ending this month. But Paramount, running pubs in the North-west, was at one time 2p higher at 11.5. The shares closed at 10.5p.

Enterprise Oil, with figures tomorrow, enjoyed SG Warburg support, gaining 10p to 507p.

Yorkshire Food Group made an impressive start. The shares, placed at 110p, touched 140p, closing at 138p. Seaq put volume at nine million shares.

Brown Shipley, the finance group, reached 40p. It was a busy session for a rarely traded share, with eight deals taking place. Guinness Peat, threatening to barge in with a counter-offer to the agreed 30p-a-share bid from KreditBank of Luxembourg, held at 19p. Brown Shipley held talks with Guinness yesterday.

Union Discount rose 2p to 91p following the expected sale of Winterflood Securities to the merchant bank Close Brothers, up 4p at 344p.

Transfer Technology advanced 29p to 517p following a 71 per cent profit improvement. But the high flyer Danka Business Systems tumbled 52p to 632p, apparently in belated response to an investment presentation held in the US last week.

ML Holdings, the aerospace group, held at 19p. Its pounds 14.3m rights enjoyed a 92.7 per cent take-up. The rump was placed by Panmure Gordon at 18p.

Capita Group, which provides services for the public sector, added 7p to 478p. Credit Lyonnais Laing suggested the shares were a buy. It forecast profits of pounds 5.4m this year and pounds 6.3m next.

Shares paused for breath yesterday. The FT-SE 100 index lost 7.4 points to 2,949.9 and the FT-SE 250 index eased 0.5 to 3,119.2. Trading was often brisk with a turnover of 776.5 million shares and 44,491 bargains. Government stocks gave ground, with falls of up to pounds 3/8 at the long end of the market.

Action at Govett & Co, the fund management group. The US investment bank Bear Stearns, a market maker in the shares, snapped up 16.1 million (21.5 per cent) at 203p from an Australian group, James Hardie. Govett then paid 208p a share for 7.5 million which will be cancelled, improving earnings. Govett, seeking a full US Nasdaq listing, rose 3p to 235p.

More stake changes at Amberley, the building preservation group, where Hemery Nominees has lifted its interest to 27.28 per cent. Hemery is related to Brian Meddings, ex-BPB, and Robert Healey, formerly with ADT. Unquoted stone group Peter Cox has 29.9 per cent. There are plans to expand lossmaking Amberley through takeovers. The shares fell 3p to 25p.

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