Market Report: Sterling's fall starts a stampede into exporters

The stock market was in euphoric mood as sterling weakened and takeover talk swirled around.

The pound's dramatic slide started the stampede. Said one leading stockbroker: "I was in my bath when I heard on the radio about the pound's sudden fall from grace; as soon as the market opened we were ready to sell domestic shares, like supermarkets, and pile into exporters."

He was not the only one to get the message. Exporters, hit as sterling strengthened in recent months, were suddenly in rampant form as many of the groups with extensive home market exposure wilted.

The drugs groups enjoyed the additional benefit of yet another round of takeover speculation. SmithKline Beecham led blue chips with a 36.5p gain to 880p with some talking of a strike from Roche, the Swiss giant. Zeneca, for long the favoured Roche target, jumped 51p to 1,723.5p.

But a 32.5p gain to 956.5p by Glaxo Wellcome, which could eventually descend on Zeneca, illustrated the pound's strong contribution to the market's drugs fixation.

Others drawing encouragement from sterling included Grand Metropolitan, British Steel and Allied Domecq.

It was enough to lift Footsie 52.4 points, its best gain since November, to a 4,271.5 peak. The supporting FTSE 250 index jumped 29 to cross 4,600 for the first time, ending at 4,616.

Datastream calculated the market is now valued at pounds 117.6bn with yesterday's advance adding pounds 11.9bn.

Retailers were big casualties. A sudden round of negative comments on superstores also took its toll. For example Barclays de Zoete Wedd said sell Somerfield and ABN Amro Hoare Govett turned bearish on J Sainsbury, trading statement today, and Asda. But Kleinwort Benson, NatWest Securities and SBC Warburg were largely positive on the sector. The latest AGB Research supermarket survey, indicating a fall in Asda's market share, was another influence.

Worries about Sainsbury also eroded confidence. There are fears the group will produce a cautious trading message with some talking about the possibility of reorganisation charges and provisions against unexpected do-it-yourself costs. The shares, however, bucked the trend, up 5p to 392p.

The expected interest rate standstill until the election and what appeared to be a scramble by some institutions to climb on the equities bandwagon also contributed to the market's exhilarating display.

Fund managers were again on bid alert on the story German bank Dresdner is on the prowl. Mercury Asset Management gained 31.5p to 1,307.5p and Henderson Administration moved ahead 55p to 1,332.5p.

National Grid gained 3p to 215p with Kleinwort signalling a 240p target and Smiths Industries improved 19.5p to 774.5p ahead of an Albert E Sharp presentation.

Williams Holdings was helped 7p higher to 334p by BZW support. Dixons fell 8.5p to 498.5p; a seller of more than 1 million shares had to retire without dealing.

Senior Engineering put on 4p to 117p in busy trading on whispers of takeover action. William Cook, with an pounds 80m leverage buyout threatening the contested Triplex Lloyd offer, rose 45p to 720p. Triplex, considering its next move, firmed 2p to 190p.

Second-line drug shares were active with Medeva, up 8.5p to 288p following a link with Peptide Therapeutics, 47.5p higher at 289p. British Biotech came in from the cold, up 21.5p to 230p. Shield Diagnostics fell 7p to 130.5p after warning about losses.

Thomas Jourdan, the consumer group, held at 46p; David Abell has lifted his interest to 21.23 per cent. English National Investment Co, controlled by Joseph Lewis, scored a 49p gain to 172.5p as the Bahamas-based multi- millionaire granted the company an option on his pounds 40m, 25.1 per cent stake in Glasgow Rangers.

Critchley, an electric components group, fell 37.5p to 760p on profit downgrades and Ryland, the garage chain, reversed 12p to 88.5p as bid talks, thought to be with Sanderson Bramall, broke down.

Wainhomes, the builder, firmed to 134p; after the market closed Bellway Homes said it had sold its 4.8 per cent stake, seemingly at 130p. Barratt Developments was a victim of the switch to exporters, tumbling 10.5p to 275p and John D Wood, the upmarket estate agent, rose 9.5p to 99.5p after a 244 per cent interim profits gain to pounds 795,000.

Manchester Utd climbed 9.5p to 728.5p. Sharelink, the execution-only broker, said of its 10 most actively traded shares in the past week five were football clubs.

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