Market Report: Sid enjoys the ride as Railtrack shares pick up steam

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The Independent Online
Railtrack, expected by many alleged experts to be shunted into the sidings, is turning out, in stock market terms, to be one of Sid's and the Government's most successful privatisation exercises.

The shares, after early hesitancy, have got up a good head of steam and in brisk trading reached a new high, up 10p to 269.5p.

Their performance is mystifying. There is still an interesting 6.4 per cent dividend yield. But last week the shares went ex the 13.75p dividend which had prompted considerable interest.

Providing much of the impetus is the veritable treasure trove of hidden riches. Some estimates put net assets at 530p a share; the retails sale price was 190p.

Its vast property interests stretch far and wide. Under the aggressive, more streetwise management which is supposed to come with denationalisation, these assets should be made to sweat, producing the sort of rewards the old, often stationary British Rail could only dream about.

Then there is the controversial pounds 825m plan to take over the Porterbrook rolling stock leasing company. Could this audacious bid herald corporate action at Railtrack? Nobody is quite sure. But few are prepared to dismiss such a possibility.

The rest of the market, with a little help from New York, shrugged off another US employment advance, increasing the chances of a trans-Atlantic interest rate lift.

The FT-SE index recovered a 30.4-point fall to close with a 5.8 gain at 3,893. Takeover speculation helped. Zeneca, despite the failure of the widely rumoured Swiss bid to materialise, restrained its fall to 10.5p at 1,577p. Societe Generale Strauss Turnbull advised clients to "top slice" their holdings.

The day's deals involved a pounds 250m care homes merger between Takare and Court Cavendish and the market did get its Swiss bid - perhaps not the mega one expected but a pounds 23.3m offer for Neotronics Technology, an electronic equipment group. NT jumped 40p to 87.5p. Court Cavendish gained 19.5p to 235.5p and Takare 2p to 150.5p.

Lucas Industries gave way to LucasVarity. The new Anglo-American group will go into Footsie later this month; in the meantime it enjoys a much more powerful presence in the other indices. Salomon Brothers, the US investment house, was an avid buyer, accounting for much of the near 25 million turnover. NatWest Securities put a 275p target on the shares.

Rolls-Royce, trumpeting $1.5bn worth of orders at the Farnborough Air Show, gained 4p to 239p. But its achievements failed to impress its biggest shareholder, Mercury Asset Management. It cut its stake by 17.1 million shares to 11.92 per cent.

Johnson Matthey, the metals group, was unsettled by Barclays de Zoete Wedd and UBS profit downgrading. The shares fell 25.5p to 578p.

Grand Metropolitan's food reshaping lifted the shares 12p to 485.5p and Allied Domecq continued to score from its brewing sale, up 5.5p to 477p. But buyer Bass, under pressure on worries about its betting operation, fell a further 9p to 792p on reports rival Scottish & Newcastle was objecting to the deal.

Merrill Lynch came to the aide of the power generators, weighed down by next week's final instalment on the partly paid stock and an apparent overhang from this week's Government sales. The US investment house put a 500p target on National Power and 560p on PowerGen. It had no immediate impact. National Power's decline continued with a 3.5p fall to 383p and PowerGen also lost 3.5p, to 490.5p.

Tate & Lyle, the sugar group, continued to recover from its slide early this week when it opened a series of investment meetings. Although profits for the year ended this month will be lower it appears, Tate & Lyle has been more optimistic about next year. The shares, down to 449.5p on Monday, added another 4.5p to 465.5p.

Schroders, the merchant bank, fell 54p to 1,393.5p on results. Union, the old discount house, moved ahead 8p to 114.5p. Joseph Lewis, the Bahamas- based investor, has built a stake and there were indications he could be trying to acquire more shares.

Johnson Fry, on its plans to unload its housing division, put on 5p to 169p. Fenchurch, the insurance broker, rose 2p to 99p on speculation of a US bid.

Monument Oil & Gas fell 1p to 58.75p. Electra, the investment trust, sliced its stake from 11 per cent to 4.5 per cent, selling 42.5 million shares through NatWest at 57p.

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