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Market Report: Selling of futures puts an end to early rally

A FURTHER bout of selling of futures unhinged share prices yesterday and left the market on an unsteady footing ahead of today's climax to the long three-week account.

The FT-SE index of the 100 leading equities lost 10.2 points to 2,786.3, but dealers were concerned about the June contract in the futures market, which went to a discount at the close at 2,780.

Trading appeared to be healthy, with more than 680 million shares changing hands, but volumes were flattered by several basket trades.

A positive push in the morning, which saw the FT-SE 100 rise above 2,800, lacked backbone with investors continuing to sit tight ahead of an expected deluge of cash calls in the next couple of accounts.

Over the account so far the FT-SE 100 has registered a spread of more than 100 points. It climbed from 2,824.4 at the outset to 2,881.1 in the first four days, but has only recorded gains on two trading days since.

Trading in options was very subdued. BTR was the most heavily traded, producing more than 1,900 calls. However, shares in BTR, seen as a possible bidder for Lucas Industries, fell 9p to 583p.

There is a deep-seated belief in the market that a big takeover bid is on the way. United Biscuits, high on the City's list of likely targets, rose 6p in morning dealings but drifted back to 421p, up 1p, as the renewed speculation died away.

Takeover talk again involved Gestetner, which rose a further 4p to 120p. Trading in the very tightly held shares amounted to a steady 776,000, and a couple of delayed trades appeared on the screen in late dealings.

James Wilkes gained another 1p to 71p on rumours that Suter, headed by David Abell, was preparing to strike soon.

Overall, there was little grist for the rumour mill and there was only a thin spread of corporate results.

Companies that did report included BP, which advanced 10p to 306p on better-than-expected first- quarter profits. More than 9 million shares were traded.

Bank of Scotland, however, eased 1p to 137p on a 45 per cent rise in bad debts to pounds 372m. Jefferson Smurfit fell 4p to 243p on news of a 40 per cent decline in annual profits.

In leisure, Ladbroke Group came under further pressure and closed 3p off at 157p, just above the year's low of 154p. The fall was despite NatWest Securities reaffirming its buy recommendation in a circular on the group's betting operations.

Ladbroke's shares, one dealer said, were suffering from concern about a possible overhang of millions of shares if shareholders place large chunks of their enhanced scrip issue dividend.

Forte slipped 1p to 192p. The company formally launched a motel chain in Italy as part of a push to expand its presence in Europe.

Water utilities had a better session, benefiting from a positive stance by UBS. Anglian Water gained 4p to 492p, NorthWest rose 7p to 492p and Yorkshire firmed 4p to 533p.

Hutchison Whampoa eased 1p to 160p following a placing in Hong Kong of 250 million shares at HKdollars 18.30.

A 2p fall to 70p greeted Chiltern Radio's news that its licences to operate three FM and three AM local radio stations had been renewed until 2002.

Tomkins retreated by 12p to 224p on reports that 1.5 million shares were on offer through BZW. Volume trading was 3.5 million.

A Goldman Sachs buy note lifted Legal & General by 5p to 449p. BAA, favoured by James Capel, gained 5p to 740p.

A morning rally in share prices was short-lived, and the FT-SE 100 index failed to hold on to ground reclaimed above 2,800. After showing an early advance of 9.5 points to 2,806, the index finished 10.2 lower at 2,786.3. Account ends today, and settlement is on 17 May.

Shares in P-E International, the UK's oldest management consultancy group, surged 12p to a 1993 high of 76p. There were rumours that US institutions were taking an interest in the belief that the company would soon announce several long-term contracts, including one in China. Analysts expect profits this year to recover to pounds 700,000 before tax, having collapsed from pounds 1.6m to just pounds 160,000 in 1992.

There are signs that Sir Brian Wolfson is shoring up his defences ahead of a threatened assault on his chairmanship of Wembley, owner of the national stadium. Orpington Investments, an ally, has lifted its holding to 10.86 per cent by buying another million shares. David Griffiths, former Wembley chief executive, is understood to be trying to incite a shareholder rebellion. The shares remain at 17p.

Wiltshire Brewery advanced 3p to 12p, a high for 1993, on talk that a single buyer was mopping up surplus shares on dealers' books. The company was recently transformed from being the smallest quoted brewer by a tie-up with United Breweries of India, run by Vijay Mallya. Investment Bank of Ireland, which advised Wiltshire on a purchase of 28 pubs, recently paid pounds 1.6m for a 19.24 per cent stake.