Market Report: Smoke gets in BAT's eyes as analysts trim estimates

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BAT Industries, the financial services and tobacco giant, is being forced to endure a series of profit downgradings.

The shares fell 17p to 538p as Morgan Stanley, the US investment house, joined the rush to trim estimates.

BAT, which is merging its fund management operations to form a group with pounds 30bn under single command, has been hit by the fierce US cigarette price war started last year by its big rival, Philip Morris.

Last week James Capel cut its BAT forecast from pounds 1,78bn to pounds 1,72bn.

Hoare Govett has since reduced its figures; so has Barclays de Zoete Wedd, which is now looking for pounds 1,84bn against earlier hopes of pounds 1,88bn. For this year BZW is down from pounds 2,08bn to pounds 2,03bn.

But its analyst, Nyren Scott- Malden is perplexed by the share weakness. 'The shares are looking very cheap', he said. BAT shares have had a good run since falling to a 1993 low of 410p in July.

Rank Organisation, reporting tomorrow, faded another 20p to 993p.

The rest of the stock market was hit by some determined selling with the FT-SE 100 index diving 26.8 points to 3,413.8; the supporting FT-SE 250 index lost 12.2 to 3,889.2. Portfolio programmes were detected with some suggesting that two significant exercises with a sale emphasis had been conducted.

Great Universal Stores attracted attention as Smith New Court sought to place 13 million shares at 610p for an unidentified client. Although the investment house seemed to get much of the shares away, mainly in small lots, it appeared it was still sitting on some when trading ended. The price ended at 620p, down 6p.

Banks had a difficult session with Robert Fleming Securities suggesting profits should be taken after the recent strong run. Standard Chartered fell 30p to 1,179p and TSB 9p to 250p.

Some of the engineers fared well as investors sought out shares seemingly left behind in the recent stampede. GKN and T&N were firm with Capel keen on both shares and London Wall Equities alighting on T&N.

Reed International lost an early gain, ending down 7p at 882p, as Panmure Gordon trimmed its profit expectations. But Marley, the building materials group, rose 6p to 196p with NatWest Securities lifting its profit estimate from pounds 29m to pounds 31.5m.

Three rights issue rumps were placed. NFC, the freight group, had a 91.1 per cent take-up with Cazenove and UBS placing the rump at 260p; Heywood Williams enjoyed a 97 per cent success with Cazenove handling the residue at 423p; and Bowthorpe collected 87.5 per cent with, it seemed, the busy Cazenove, joined by Credit Lyonnais Laing, selling the unwanted stock at 366p.

NFC fell 3p to 263p; Heywood rose 5p to 430p; and Bowthorpe firmed 1p to 372p.

Geest, the fresh food group, tumbled 87p to 276p following the losses warning; Magellan Industries, the lingerie and swimwear group run by high-flyer Charles Ryder, dropped 44p (after 87p) to 168p after a statement that profits would be down.

Eurotunnel gave ground, off 17p at 608p, as its shuttle fare structure appeared to be higher than many observers expected. P&O shipping group failed to benefit, falling 3p to 630p.

British Aerospace climbed 6p to 446p on, it was said, Kleinwort Benson support. Cementone, a chemical group formerly an investment trust called Multitrust, returned at 86p, a 10p premium.

RTZ gained 6p to 853p after meeting institutions in Edinburgh; Lonrho retreated 3p to 144.5p on the boardroom split. Coal Investments, at one time 14.5p higher, ended 10p up at 55p following the Credit Lyonnais Laing comment.

Watson & Philip, the convenience food group, gained 33p to 343p on its profits advance from pounds 10.3m to pounds 12.5p.

Hunters Armley, the printer, slipped 4p to 181p as Panmure Gordon placed 2.2 million shares at 177p.

Carrs Milling Industries, a baking and flour group that rarely attracts much market interest, gained 11p to 166p. After the market closed it was reported that at the yearly meeting at Carlisle shareholders were told trading was better than expected and the group should make a profit of pounds 2m this year after pounds 227,000 previously.

Inspirations, the holiday group that came to market last month, jumped 16p to 125p, after touching 135p, as some took the view it had been left behind in the excitement over holiday prospects that lifted Airtours another 14p to 537p. There are indications that Inspirations is getting its share of the trading upsurge and profits could make spectacular headway this year.

Court Cavendish, one of the few new issue flops of last year, seems to have got its second wind. The shares, floated at 225p, sank to 180p with institutional support less strong than expected. They jumped 18p to 250p yesterday on hopes of good interim figures on Monday. The group, despite its shaky debut, has been active on the takeover front.

Hi-Tec Sports, the sports shoe group, has had a good run since the start of last month, climbing 25p. The shares rose 4p to 87p yesterday. They have been inspired by the success of the group's US operation. Transatlantic profits more than trebled in the first half year. There are hopes profits could nudge pounds 3m this year. Last year Hi-Tec plunged pounds 8.3m into the red.

The FT-SE 100 index lost 26.8 points to 3,413.8 and the FT-SE 250 index 12.2 to 3,889.2. Turnover was 882.8 million shares with 37,838 deals. The account ends on Friday with settlement on 24 January. Government stocks fell by up to half a point.