Market Report: Shares climb further in a show of satisfaction

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The Independent Online
SHARES turned in a strong performance as the Chancellor outlined his Budget proposals and the FT-SE 100 index ended 31.1 points higher at 3,166.9, its best level for a month.

In the past four trading days the index has climbed almost 100 points as the stock market has anticipated a favourable Budget which should keep the fragile economic recovery on course.

Many dealers expect further gains, although profit taking after the four-day upsurge could hinder progress in the next few days. Some were talking of a Footsie level of 3,300 before the end of the year. Long dated government stocks were also sharply higher.

The main equities index is still more than 30 points from its peak. The second line FT-SE 250 index, up 18.9 at 3,484.9, is 60 points from its high.

The market was relieved that the Chancellor resisted the temptation to attack pension funds, tinker with corporation tax, extend the VAT base or increase beer and spirit duties.

He also left the door open for more interest rate cuts. Hopes are high for another reduction in time for the Christmas shopping spree.

After-hours trading produced some sharp gains, underlining the market's satisfaction with many aspects of Kenneth Clarke's maiden Budget.

The absence of VAT on newspapers prompted a 570p price for United Newspapers compared with 549p, up 10p, at the official close. The unchanged Excise Duty prompted Guinness to extend a 9p gain at 469p to 481p.

But the air travel surcharge took its toll of British Airways, down 8p at 420p and then 412p in after- hours dealings, Airtours down 6p at 435p, and Owners Abroad, down 3p at 75p.

However, some observers believe that with the tax being collected quarterly the airlines and tour operators will benefit from the short-term cash deposits.

Television shares put on their own display, largely independent of any Budget influences, as the industry's takeover soap opera continued to capture attention following Carlton Communications' pounds 760m swoop on Central Independent TV.

Carlton gained 34p to 831p, dragging Central up 73p to 2,646p. LWT (Holdings) added 12p to 591p and Scottish TV 23p to 489p.

Merchant banks were also firm, spurred by a Credit Lyonnais Laing upgrading for Kleinwort Benson. CLL has lifted this year's forecast from pounds 77.5m to pounds 91.5m and next from pounds 89.5m to pounds 95m. Kleinwort rose 15p to 523p. In sympathy Hambros jumped 17p to 372p and SG Warburg 15p to 857p.

Glaxo Holdings chose Budget day for an analysts' briefing. Positive comments about Zantac, its top selling anti-ulcer drug, helped the price a modest 5.5p higher to 676.5p.

Oils were mixed although the two leaders were firm. British Petroleum rose 8p to 333.5p and Shell 14.5p to 680p. In a dollars 10m deal BP is taking control of the Recetor 1,137-square kilometre field in Colombia.

Lasmo fell 4p to 112p, a new low for the year, as dividend worries continued to ruffle sentiment. Sell advice from Societe Generale Strauss Turnbull added to the gloom.

Textiles were rattled by the surprise profit fall and dividend cut by Dawson International, down 37p to 136p.

Bristol Scotts, the restaurant and stadium group, made an impressive advance. The shares rose 27p to 130p. A battle for control is gathering momentum with the once commanding position of the Kerman family under threat. There is confusion about an option deal between Nicholas Kerman and banker Claude Hug.

To complete the option, shares may have to be bought in the market and moves are afoot to make life difficult for any forced buyer.

Euro Disney enjoyed a rare advance, up 8p to 368p. The tour operator Thomas Cook produced a litte cheer for the hard pressed group by confirming it will market holiday packages for the French theme park for next year.

Tiphook, the struggling container group, dipped 7p to 58p. The US influence continues to grow. Bank of New York, representing ADR holdings, now has 57.35 per cent.

Electricities were strong, bolstered by the 20 per cent dividend increase by Eastern, up 8p to 596p.

Among financials Jupiter Tyndall, the investment group, rose 10p to 215p as a hovering line of stock was at last mopped up.

Merchant Retail Group gained 1.5p to 13p. It is in talks to sell all or part of Normans, its West country supermarkets division. The group also has department store interests.

Marine & Mercantile, one of the little known groups planning to become a force in the former Soviet Union's oil industry, held at 335p.

Scottish Amicable has lifted its shareholding from 7.5 per cent to 10.8 per cent. It picked up shares in a placing to finance the acquisition of petrol distribution vehicles.

The recent surge in the FT-SE 100 share index continued amid some brisk trading. A 31.1-point rise took the index to 3,166.9, making the total gain over the past four days almost 100 points. The account ends on 10 December. Settlement is on 20 December.

Betterware, the direct selling group that has moved from glamour share to bear fodder in a few months, is still overpriced at 158p (down from a 278p peak), Kleinwort Benson suggests. It believes Betterware's products are expensive, its margins vulnerable and competition will intensify. Profit this year is estimated at pounds 15m, with pounds 18m in the following year.

Pearson, up 8p at 604p, is the firm favourite to buy Extel, the financial information group being sold by United Newspapers. It is said the banking and publishing group has clinched the takeover with a pounds 72m offer. Bidding for Extel is said to have been keen but only Pearson has approached the United valuation. Last week VNU, the Dutch group, withdrew from the auction.

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