Market Report: Second and third-liners take up the running

SELL in May and go away, probably the oldest of the stock market proverbs, has once again turned out to be completely wide of the mark.

Although Footsie has dillied and dallied throughout the month the rest of the market has been in rampant form as second and third-liners have taken up the running from the rather jaded looking blue chips.

As Footsie has fallen just 57.6 points to 5,870.7 supporting indices have made dramatic progress.

The mid cap has surged nearly 300 points, hitting a peak this week, and the small cap has climbed 127 to a high.

The merry month of May did not, however, enjoy a rapturous close. Worries still persist about Asian markets and Moscow's steadier display does not carry much conviction.

A nagging feeling that domestic interest rates could be set for a surprise increase already retarded sentiment.

Trading volume looked high but big trades in the once crippled Queens Moat Houses, the hotel chain, ballooned turnover.

QMH jumped 4.5p to 36.5p, highest since the shares returned from suspension three years ago, as Banque Nationale de Paris Suisse sold its 17 per cent stake. It was placed by stockbroker Cazenove with institutional investors. Most of the French interest was acquired in the low teens.

Helped by the 167 million recorded QMH volume, market turnover topped 1 billion shares.

Asda, contemplating a trading alliance with Kingfisher, fell 1p to 182p. The most flirtatious Footsie constituent is also rumoured to be talking about a possible trading pack with Storehouse, up 10p to 279p. Positive comments from Salomon Smith Barney also helped sentiment.

Hillsdown, on the dramatic and sudden breakdown of its merger talks with Unigate, slumped 23.5p to 183p. Unigate, expressing relief that such an ambitious deal had been aborted, rose 28.5p to 665p.

Compass, the contract caterer, jumped 85p to 1,270p on Rentokil Initial bid hopes and indications that the shares could be joining Morgan Stanley's influential international index. Rentokil was again heavily traded, gaining 12p to 427.5p. MFI struggled up just 1.5p to 79p, on talk of corporate action.

Brewer Bass frothed 33p higher to 1,125p. Morgan Stanley support was responsible. The investment house has apparently dropped General Electric Co from its buy list in favour of Bass. GEC fell 4p to 502p.

Beazer, the house builder, managed a further 11p gain to 231p on persistent chatter that a bid is being prepared. The shares are at their highest since they returned to market in 1994.

British Aerospace, 24p up at 543p, responded to the development of a joint venture with the French Dassault Aviation to research hi-tech systems for combat aircraft.

On the banking pitch, HSBC gained 57p to 1,600p after a bullish trading statement which prompted Morgan Stanley to produce a near 2.200p target.

Irish banks, with Panmure Gordon suggesting a possible 25 per cent upside, were firm. Allied Irish improved 10p to 804.5p.

United Assurance gained 37.5p to 611p. Andrew Longhurst, the man who developed Cheltenham & Gloucester Building Society before being squeezed out after the Lloyds TSB take over, is to become chairman and Alan Frost, Abbey Life managing director, chief executive.

Booker, the food group, held at 296p against 479p a few years ago. The yearly meeting is due next week when details of a strategic review should be known. A break-up is thought likely.

Computer group CMG traded at 1,720p, an effective 55p gain, after its bonus issue. The slimlining operation did not, however, go to well in Amsterdam, where confusion prompted a share suspension.

Internet Technology's run continued with a 13.5p gain to 179.5p.

Spargo Consulting, where an American bid has been agreed, rose 6.5p to 284p. Comino, an IT group, put on 16p to a 270.5p peak. The shares have climbed more than 100p in a few weeks. There was the inevitable takeover talk.

Delancey, an obscure property group, was comfortably the day's top performer, jumping 46 per cent to 150p. George Soros, the currency trader famed for breaking the Bank of England, has descended on the company.

He intends to make Delancey his British vehicle and is pumping pounds 100m into the property minnow. The deal also includes the acquisition of a property advisory company owned by the Ritblat family. The shares were 65.5p in November.

Metsec, an engineer, rose 30p to 255.5p on a 260p (pounds 41.6m) Austrian offer.