Market Report: Shares rally as bond dealers regain confidence

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The Independent Online
THE new account opened with a surge of confidence, driving the FT-SE 100 index 46.9 points higher to 3,328.1.

Last week's nervous retreat, which cut the index by more than 100 points, was conveniently forgotten as world bond markets continued to recover. Government stocks joined in, achieving gains of more than pounds 1 among the longer maturities.

Hopes resurfaced that interest rates would be cut in a bid to offset the looming tax increases.

The optimistic noises from the G7 meeting in Germany set the scene for the share comeback. With several securities houses telling their clients the stock market was oversold, shares moved ahead. The dogfight over Bosnia failed to halt progress - and even helped oils and some resource shares higher.

Trading was not heavy, but in tight conditions it did not take much activity to move prices. The index gain was scored after stripping out dividend payments, which lopped 5.2 points from the calculation, while the FT-SE 250 index was up 40.1 at 3,960.

Granada, fresh from its victory over LWT (Holdings), held centre stage as some big trades went through with Seaq putting volume at 32 million.

Cazenove and Hoare Govett placed 9 million Granada shares at 548p, with institutions apparently scrambling to take on stock.

The shares came from a US institution, thought to be Warburg Pincus, which had remained loyal to LWT and decided, as the dust of battle settled, to sell its Granada entitlement.

With, it appeared, other LWT shareholders selling, Granada shares did well to restrain their fall to 7p at 555p.

Thorn EMI was another entertainments group to fall back as the market surged. Rumours of a sell circular left the shares 3p lower at 1,093p.

Airtours, down 13p at 540p, was hit by its legal action against the vendors of the Aspro package holidays business, while the newcomer DFS Furniture lost another 17p to 312p following last week's profit downgrading by Barclays de Zoete Wedd.

Elsewhere, gains dominated with all sectors making progress. Lonrho was up 10p to 163.5p as the Ghana supreme court in effect cleared the flotation of Ashanti Gold Fields. The share sale had been threatened by an attempt to block the Ghanaian government selling its 25 per cent interest. Lonrho has a 45 per cent stake.

Supermarkets were firmer with Wm Morrison capturing attention in busy trading. The price rose 6p to 114p as takeover talk was resurrected.

There have been suggestions that Ken Morrison, chairman, is prepared to sell his near 15 per cent stake. Other family holders, who account for a further 25 per cent, are likely to follow his example. Asda, the rumoured predator, was the weakest of the leading supermarket groups, gaining 0.75p to 57.5p.

Borthwicks, once a leading meat trader and now a flavourings producer, was another under the speculative whip, up 2.75p to 53p. The talk was of US interest.

Racal Electronics was also in the bid spotlight as stories of an offer from Cray Electronics did the rounds again. Racal jumped 9p to 229p and Cray rose 3.5p to 193p. United Biscuits also had the distinction of attracting new takeover talk, gaining 8p to 345p.

Grand Metropolitan, responding to advice to buy ahead of today's shareholders' meeting, rose 12p to 483p. Kingfisher advanced 15p to 602p following a Kleinwort Benson recommendation and amid rumours that a favourable circular is about to appear from Robert Fleming Securities.

Dixons, the electricals retailer, improved 4.5p to 214.5p, shrugging off the announcement that the Office of Fair Trading intends to launch an investigation into extended warranties on electrical goods.

WH Smith gained 13p to 519p as it confirmed talks to merge its disc operations with Virgin.

Banks enjoyed the benefits of the HSBC figures; life insurers were hesitant ahead of a Panorama look at pensions.

The day's trio of newcomers fared well. Finelist, a distributor of car parts, touched 155p, closing at 150p against a 130p offer price. Radstone Technology, placed at 125p, reached 131p, while the EFM Tiger Trust held at 50p.

The revitalised builder Regent Corporation failed to hold an early gain, closing unchanged at 21.5p after buying a small Sussex builder.

Stanhope advanced another 5p to 45p as the battle over the cash- strapped property group intensified. It appears the acquisition of a 29 per cent interest by British Land and the international investor George Soros is to be challenged by Stuart Lipton, Stanhope's chairman.

Others have expressed their interest in helping Stanhope, owner of half the City's Broadgate site, through a revamping exercise.

British Land gained 11p to 444p.

The remarkable progress of Bluebird Toys continued, up 23p to 768p. A year ago the shares were 166p and they fell to 26p in 1991. Year's results are due next week. After a dramatic increase in half-time profits and bullish noises from the company, there are high hopes of a scintillating performance. At least pounds 8m, probably more, is likely against pounds 1.55m last time.

Unigroup, a cash-rich building materials group, could be the subject of interesting activity. Its biggest shareholder, with 33 per cent, is Antah Holdings, controlled by members of one of Malaysia's royal families and mentioned in the Malaysian trade row. It sold a timber business to Antah last year and the Malaysians may now look to sell their holding. The shares held at 41p.

The FT-SE 100 index closed at its highest of the day, up 46.9 points at 3,328.1. The FT-SE 250 index gained 40.1 points to 3,960. Turnover was 705.2 million shares from 33,841 bargains. The account ends on 11 March with settlement on 21 March.

(Graph omitted)

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