The securities house believes the dividend for last year should be lowered from 7.25p to 5p and the shares sold down to 95p.
At one time it looked as though SNC would get its wish. The shares, which touched 176p last year, fell 10p to 98p but in busy trading recovered to 106p.
The stockbroker Carr Kitcat & Aitken was probably behind the rally. On Tuesday it forecast a dividend cut, but suggested the shares were a buy. With SNC creating such damage, Carr piled in to pick up stock.
SNC believe Rolls may, at one time, have been reluctant to reduce its dividend because of the group's traumatic experience when it crashed two decades ago. 'A cut would have sent the wrong signal to the company's customers,' SNC's Pete Deighton said. But with the aero business so ravaged by recession, Rolls, he felt, was now expected to lower its payment.
He is holding his profit forecast at pounds 55m for last year with pounds 85m likely this year.
But as Rolls and the rest of the stock market struggled, Lucas Industries, the car components and aerospace group, jumped 6p to 149p, underlining the hovering threat of a takeover strike. BTR, the conglomerate that acquired Hawker Siddeley, is the favourite to pounce.
The latest Gulf hostilities, rights issue fears and profit downgradings ensured a lacklustre performance by the FT-SE 100 index, down 12.6 points to 2,745.3. It was the seventh consecutive fall. Last time the index suffered such a string of minus signs was in August. The previous seven-day fall was in 1985.
British Petroleum, despite a sharp downgrade and a weakening crude oil price, remained firm at 237.5p. The US securities house Morgan Stanley has cut its final-quarter profit forecast from pounds 135m to pounds 95m, and expects pounds 350m for the year. But after extraordinary items the analyst Lars Reierson is looking for a pounds 480m loss. He believes the shares should be around 195p.
Morgan is, therefore, out of step with many US investors. It is trans-Atlantic buying that has kept the price bubbling above 220p. Some UK analysts believe the shares deserve to be at 160p.
Vodafone Group fell 9p to 399p as the market fretted about the outstanding figures expected today from Cellnet, Vodafone's cellular rival. The Cellnet performance, expected to be up 50 per cent, will accompany the year's results of Securicor Group. It owns 40 per cent of Cellnet with BT taking in the rest.
NatWest Securities believes Securicor will announce profits of pounds 54m, up from pounds 33m.
Cable and Wireless slipped 15p to 692p as Hoare Govett trimmed its profit forecasts by pounds 25m to pounds 800m and pounds 25m to pounds 925m.
Lehman Brothers suggested a switch out of Courtaulds, down 14.5p at 572.5p, into Laporte, up 7p at 602p.
Whisky shares remained weak following the Guinness shake- up. Guinness fell 6p to 467p and Invergordon Distillers, on fears American Brands will come back with a bid below the 275p it offered in 1991, tumbled 10p to 280p.
Northern Foods retreated 8p to 270p. Cazenove was rumoured to have cut its forecasts by pounds 4m to pounds 151m and pounds 5m to pounds 170m. The brewer Whitbread felt the impact of lowered UBS Phillips & Drew estimates. It cut by pounds 10m to pounds 250m and pounds 40m to pounds 225m. The 'A' shares fell 11p to 466p.
Alexon, which will not pay a final dividend, lost 9p to 68p, and Dixons, reflecting disappointing profits, slumped 29p to 225p. Body Shop International encouraged analysts to reduce forecasts following Christmas trading. Panmure Gordon went down to pounds 20m- pounds 22m from pounds 24m. The shares lost 15p to 153p.
Manchester United, up 18p to 367p, continued its run. Bear covering helped Hillsdown Holdings 8p higher to 143p.
Generators and electricity distributors were strong on renewed talk of a British Coal deal.
Takeover rumours resurfaced to help the cash and carry group Nurdin & Peacock up 9p to 186p. Watson & Philip was steady at 285p. Greig Middleton and SG Warburg placed a 16.2 per cent stake with institutions at 257p.
Another lacklustre performance left the main indices lower. The FT-SE 100 index finished 12.6 points down at 2,745.3 and the FT-SE 250 index 2.8 off at 2,876.3. Turnover remained strong, with volume reaching 652.8 million and 26,741 bargains recorded. Government stocks were little changed
Hopes are high that Rubicon Group, formerly Courtney Pope, will return to the dividend list when it announces its interim figures next week. The shopfitter has been revamped and last year moved back into the black. Trading is thought to be satisfactory and Rubicon has indicated it will pay a dividend, its first for three years, with its half-time results. The shares held at 123p.
The arrival of Sir Michael Edwardes, the former British Leyland chairman, as a director of Hi-Tec Sports, the sports shoe group, has put some bounce in the shares, lifting them 12p to 42p. The shares of the loss-maker could do with a hand - they topped 200p last year. Sir Michael is chairman of another struggling group - Porth, maker of Christmas decorations.Reuse content