Market Report: Second-liners rampant as Footsie edges to a peak

AT LONG last second-liners out performed their blue chip peers. As Footsie edged its way to a new peak, Midcap shares were in rampant form, with the FTSE 250 index surging 60.5 points to a 5,132.3 high. It was the sharpest advance since September when the stock market got hold of a story that the Government had softened its EMU stance.

The Midcap resurgence occurred at a time NatWest Securities said the second and third-liners were expected to record faster growth than blue chips.

IT shares provided much of the midcap impetus. Logica topped the list with a 107.5p gain to 1,472.5p. Misys rose 145p to 2,570p and Sage 70p to 1,275p. Besides the seemingly heady prospects for computer shares the market was caught on the hop by an acute shortage of stock.

The shrinking pool of shares was also a big factor in Footsie's progress, up 19.7 to 5,764.8. Fund managers are actively chasing shares and with few investors prepared to sell the inevitable pressure is upwards.

The Smallcap index was also strong, gaining 9.9 to 2,457.6, a record.

Utilities, particularly waters, made a contribution to Footsie's advance. After suffering in recent days on worries that the Government planned a much tougher regulatory environment, they found themselves floating on a rising tide of hope as the industry regulator, Ofwat, adopted a soft line over pricing which could influence any Westminster review.

Thames Water surged 50p to 895p; Seven Trent, said to have been gloomy about the government review, put on 35p to 929p and United Utilities rose 29p to 799p.

Even electricity shares responded. National Grid gained 16p to 338p and PowerGen 26p to 850p.

Elsewhere, the market drew strength from company results although Abbey National was a disappointment, off 100p at 1,220p. Centrica put on 6p at 108p on figures and the prospect of a Panmure Gordon review next week.

Takeover speculation cooled after Wednesday's rampant display but the hunt for possible targets continued, providing a whirl for one of the market's oldest candidates, United Biscuits.

In busy trading the shares hardened 13.75p to 272p, equalling their year's high. UB has enjoyed some spectacular surges in the past on takeover speculation. The shares once shot to 435p on talk of a bid from Cadbury Schweppes. It seemed the two did hold talks but price, not personalities, was the stumbling-block.

Signet, the old Ratners, sparkled with a 2p gain to 38.75p, highest for four years. An American bid or even a defensive alliance with Argos, fighting a hostile strike from Great Universal Stores, provided he encouragement.

Lasmo rose 20.5p to 277.5p on results. Its decision to pull out of Colombia could cause concern for supporters of Emerald Energy and others involved in the South American country.

"Almost every well we drill out there is a success. But they are just not material reserves ... with the capacity to support Lasmo's target of 50,000 barrels a day," said Joe Darby, the chief executive. Emerald, due to report on its Colombian drilling any day now, firmed to 9p.

Tullow Oil, as stories that its Bangladesh agreement had finally been signed went round again, rose 7.5p to 156.5p.

Ronson gained 3p to 9.5p on stories that Victor Kiam, the man who bought Remington because he liked the company, would become chairman. The struggling luxury goods group confirmed it was involved in a refinancing but did not comment on the Kiam rumour.

Photobition, the printing services group, gained 21.5p to 325p on the Henderson Crosthwaite investment dinner.

Colt Telecom's remarkable progress continued with an 85p gain to 1,235p. Last spring the shares were 267.5p. Other telecoms were firm, with BT up 4p to 606p and Vodafone 3.5p higher at 542.5p. Racal Electronics, on HSBC support and rumours of a telecom deal, rose 17.5p to 288.5p. SDX Business Systems, supplying sophisticated telephone switchboards, put on 5p to 227.5p after Dresdner Kleinwort Benson dialled a 300p target.

3i, the investment group, improved 26p to 571p after an investment presentation.

Motor shares, nursing some of the market's lowest ratings, firmed, helped by the Lex Service figures. Lex ended 14p higher at 460.5p.

The coming flotation of Desire Petroleum, owning the largest Falkland Islands offshore acreage, continued to create action at 20 per cent shareholders Greenwich Resources, up 0.25p at 21.75p, and Westmount Energy, 2p to 168.5p.

Computer group Spargo Consulting jumped 22.5p to 195p. Figures are due next week.