Market Report: Rumours surround Reuters as Footsie romps ahead

Rumours of a big wire service merger were almost submerged in the excitement over the digital television alliance.

Stories surfacing in New York suggested Reuters, the financial information group, was seeking a deal with the US information provider Dow Jones, creator of the famous New York share index.

According to a report in Business Week, the London-based group has put out feelers to leading Dow Jones shareholders. Reuters, it said, had expressed an interest in merging with Dow Jones, which publishes the Wall Street Journal and Barron's magazine. It was also prepared to mount an outright takeover bid although reluctant to make a hostile move.

A US fund manger, Michael Price, who runs Franklin Resources Mutual Share Fund, has built a 5 per cent Dow Jones stake and says: "The risk-reward ratio is very good." He is determined to push the management into boosting the shares, which have failed to sparkle. Mr Price is reputed to have been a significant force in creating the pressure which encouraged the big Chase Manhattan-Chemical Bank merger.

Like Reuters the US group's profit prospects have dimmed in the face of much more intense competition and the vast capital outlay needed just to jog along in such a fast moving business. It is said some Dow Jones shareholders have grown disenchanted and would be receptive to Reuters' overtures.

As shares have soared Reuters has retreated. The price, 806p in the autumn, fell 11.5p to 656p.

Most equities romped ahead, aided and abetted by the television spectacular.

The dramatic TV alliance provided the extra spur for a market already inspired by a high flying New York and a weakening pound.

Carlton Communications, reflecting its TV link with Granada and BSkyB, led the blue chip charge, up 39p to 558.5p. BSkyB, expected to report a 40 per cent interim profit advance to pounds 150m next week, gained 18.5p to 599p and Granada 19.5p to 897.5p. Flextech, involved in the digital venture with the BBC, put on 39p to 699p.

But with the prospect of more competition the cable companies missed out. Cable and Wireless, leading the cable grouping, fell 13p to 466p and Nynex lost 14.5p to 99.5p. Others lower included General Cable, 13p to 176p, and Telewest Communications, 11p to 117p.

Footsie closed at a peak, up 47.4 points to 4,275.8, topping the previous high, hit last week, by 4.3.

The supporting FTSE 250 failed to match its earlier high, although gaining 22.8 to 4,595.4. Gilts managed gains of almost a point.

EMI, the showbiz group, had another flat session, falling 40.5p to 1,211p on worries about its US involvement. An industry study indicated sales are slowing down. Supermarkets were in the investor checkout with Safeway off 8p to 383p.

Bass, where rumours of a bid for Accor, the French hotel group, circulate, fell 5.5p to 846.5p with Barclays de Zoete Wedd said to be negative.

Among takeover stocks to the fore were Schroders, up 61.5p to 1,714p, and Zeneca, 53.5p to 1,804.5p.

General Accident, despite stories that it could barge into the Abbey National-Scottish Amicable affair, rose 24p to 806p. In a strong banking sector Abbey improved 15.5p to 784.5p.

Oils remained in form with British Borneo Petroleum Syndicate ending 46p higher at 1,365 and Monument Oil & Gas, following a NatWest Securities buy signal, gaining 1.75p to 90p. Enterprise Oil made further headway, up 7.5p to 686.5p.

Stagecoach, the buses and trains group, rose 12p to 752.5p as the tender offer by former Porterbrook shareholders led to 28.8 million shares (12.1 per cent) being sold at 730p. The vendors, cashing on the sale of their Porterbrook leasing business, had planned to sell 35 million shares.

Southern Electric, producing a cash windfall through a capital restructuring, firmed 13p to 800.5p.

SR Gent, the clothing struggler, failed to produce takeover developments, easing 2p to 57.5p. It said approaches were "being considered".

Surrey Free Inns shaded 11p to 486p as Whitbread confirmed it had sold shares. It is thought to have unloaded all its 4.5 per cent stake. The Paramount pubs chain held at 43.5p as Nomura increased its stake to 9.7 per cent.

Biocompatibles International had another ebullient run, up 215p to 1,155p; Merrill Lynch is looking for 1,600p.

Housebuilders were strong. Berkeley, up 38.5p to 735p, raised pounds 34m by placing 5 per cent of its capital at 715p.