Market Report: Rights fears send Euro Disney shares tumbling

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The Independent Online
FEARS that Euro Disney will be forced to tap its shareholders for more cash sent shares of the French theme park tumbling 35p to equal their 610p low.

They were floated at 707p and in a blaze of wild optimism soared to almost 1,700p before it became apparent Mickey Mouse and friends were out of their depth in the French countryside.

There appears to be little disagreeement about Euro Disney's requirement - more capital. The American Walt Disney group has almost half the share capital but there are widespread doubts about its willingness to accept its full obligation if a cash call does materialise.

Talk persists that trading has in the past few months been even more depressing than the forecasters expected. And vague hopes that Euro Disney could draw some indirect benefit from the French willingness to be hosts for the 1998 soccer World Cup have been dampened by provisional game allocations that imply no benefit for the theme park.

The Americans have accepted that their Euro adventure must be recapitalised. The stock market frets about the extent of the cash injection and the terms. There is a deep-rooted fear that there will be precious little incentive for existing shareholders to rush to take up their rights.

Eurotunnel was another cross-Channel share weighed down by rights issue fears. The price fell 6p to 488p as the interim statement underlined the cash shortage. A sell recommendation from UBS added to the discomfort.

The rest of the market experienced a lacklustre session in thin trading, with the FT-SE 100 index easing 6.4 points to 3,102.2. But the second-string FT-SE 250 index illustrated the underlying strength of shares with a 4.9 gain to 3,482.2.

An interest-rate cut is still a significant factor in the market's thinking. Many strategists are looking for a one percentage point fall around the time of next month's Budget. For the time being overseas buying appears to have evaporated which, it could be argued, is giving the more unadventurous UK institutions the opportunity to make up for missed chances.

Pilkington, the glass group, had a difficult session as Nikko Securities, the Japanese house, repeated its bearish view. It is looking for a profits advance from pounds 40.7m to pounds 55m with the dividend stuck at 4p a share. The shares, 144.5p, are unattractive and should be sold, it declares.

Rank Organisation was weak, down 8p at 805p, as a near one million cross at 800p, which hovered for much of last week, was finally completed. David Lloyd Leisure was another weak counter, unsettled by suggestions that a substantial difference had emerged in analysts' forecasts.

Some are, apparently, shooting for pounds 7.5m in the current year but a rumour that one analyst had settled on a pounds 6.5m figure, which would imply little if any growth, left the shares 13p down at 207p.

Lucas Industries improved 12p to 167p on the results but the surprise departure of finance director Graham Rider left Storehouse 4p lower at 207p.

Property shares continued to benefit from the James Capel confidence. Hopes that Greycoat, now free from the Postel rescue scheme, could attract a bid, probably from South African interests, did nothing for the shares, down 1.5p to 23.5p.

Micro Focus, the computer group that trailed around the City with, it would appear, unimpressive investment presentations, continued to suffer. The shares fell a further 113p to 1,133p. They have slumped more than 400p since the group embarked on its enlightening exercise.

The shares, which have acquired a large US following, reached 3,000p in February.

De La Rue, ahead of an investment meeting, edged forward 3p to 685p. A UBS buy stance also helped. Packaging group Arjo Wiggins Appleton, another with an analysts' meeting arranged, fell 2p to 227p.

Hillsdown Holdings, the food group, improved 8p to 167p despite Societe Generale Strauss Turnbull advice that a switch into Hazlewood Foods would be a clever move. Hazlewood was unchanged at 175p. But a Strauss recommendation added 3p to Marks and Spencer at 403p.

Utilities were again in form as investors continued to chase dividend yields. Some water shares hit new peaks and among electricities Manweb rose 14p to 634p.

Ladbroke, the betting and hotel group which has had a torrid time as legal confrontations have prevailed, rose 4p to 182p. The group, which is set on improving its City image, attracted buy advice from SG Warburg with Hoare Govett chipping in with a trading buy recommendation.

Prospects of a boardroom confrontation continued to unsettle Lonrho, down 4p at 117p.

Newcomer Hamlet, a clothing group, made a suitably smart debut. The shares, placed at 130p, reached 138p.

The FT-SE 100 index slipped 6.4 points to 3,102.2 but the FT-SE 250 gained 4.9 to 3,482.2. Turnover was 444.3 million shares with 31,660 bargains completed. The account ends on Friday. Government stocks were subdued.

Essex Furniture, the niche manufacturer and retailer, continues to defy the recession. Profits have climbed from pounds 727,000 to pounds 1,088,000 and around pounds 1.5m looks in prospect for the current year. The family-controlled, Southend-based company has 17 outlets and should open at least a further four stores this year. The shares held near their peak at 162p.

Fortune Oil held at 4p. The stockbroker Shaw & Co regards the shares as a 'speculative long-term buy', fascinated by the company's exposure to mainland China. It forecast that profits this year will be pounds 2.5m with pounds 4.25m likely next year. Shaw masterminded Fortune's revamp from the unexciting Blackland Oil & Gas, a small UK onshore explorer.

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