Market Report: Subsidence undermines the building sector, by George]

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Has the tide turned for Bula Resources? In a remarkable document Davy, the Dublin stockbroker, suggests the group's proposed acquisition of a 51 per cent interest in Western Siberian oilfields could value Bula at 37p a share. Bula is paying dollars 5.6m and offering shares to give the Russians a 26 per cent stake. Its shares are suspended at 3.5p while the deal is concluded.

Development Securities, the Martin Landau vehicle which used to be called Clayform, and its partner Bryant Properties have pre-let their first warehouse development on the Birmingham International Park to the Rover Group. The warehouse is being financed by the partners but they expect to sell it soon, probably to a City institution. DevSec shares held at 27.5p.

EDDIE GEORGE, Governor of the Bank of England, performed a demolition job on building shares.

His Mansion House comments about an inevitable interest rate increase was just too much for an industry which this week has had to contend with sharp falls in construction orders and house sales.

Higher interest rates would destroy what is turning out to be an extremely fragile revival.

With many investors still sitting on huge profits following the dramatic stock market re-rating in the past two years, the temptation to snatch at least some of their rewards proved irresistible.

Barratt Developments, riding at 288p in February, tumbled 10.5p to 189.5p, John Laing fell 9.5p to 282.5p and Taylor Woodrow 7p to 124p. Beazer drifted still further from its 165p issue price, down 6p at 148p.

Building materials also suffered. Blue Circle Industries, thought to be starting a series of investment meetings, fell 7p to 274p and Hepworth 14p to 307p.

The rest of the stock market was more occupied with international developments than the Mansion House speeches.

Although the Chancellor's tax cut comments and the subsequent economic statistics were positive for shares, any optimism was quickly submerged by the overnight New York setback and a revival of bond market worries.

Two US bond auctions, due next week, fears of growing inflation and the difficulties of a German group said to have heavy international borrowings hit world bond markets. Government stocks fell by up to pounds 11 4 .

Another strong advance in the crude oil price helped to fuel the inflation worries. The Korean situation and Opec's decision to hold its production at 24.52 million barrels were the main influences.

British Petroleum, still drawing strength from the expected end of the ban on Alaskan exports, put on another 3.5p to 408.5p. Shell, showing analysts its quoted US arm next week, held at 714p.

Enterprise Oil rose 7p to 398p but Lasmo continued to drift seemingly further out of reach, down 2.5p to 141p.

The FT-SE 100 index ended 15.7 points lower at 3,030.1 with the supporting FT-SE 250 index off a further 25.5 at 3,534.2.

The expiry today of the June futures also unsettled sentiment. There are swirling stories that one leading securities house has been caught wrongfooted over the supporting index, which has fallen almost 75 points this week, retreating even when the main indicator moved ahead. The firm's difficulties could produce some hectic and nervous trading immediately ahead of today's expiry.

Supermarket shares were firm, helped by thoughts that food inflation could return. Argyll rose 8p to 252p, J Sainsbury - with the added help of rumoured Goldman Sachs support - 8p to 403p and Tesco 3.5p to 224p.

But signalled investment presentations for Rolls-Royce and Vickers failed to inspire. Rolls was little changed at 188.5p and Vickers fell 8p to 166p. Lucas Industries, displaying its new brake factory at Bouzonville, France, to analysts and fund managers, retreated 8p to 178p.

Abbey National failed to survive NatWest Securities caution, falling 5p to 422p. Merchant banker Rea Brothers lost 13p to 62p as it warned of lower first half profits because of the fall in gilts.

Royal Bank of Scotland gained 12p to 422p as Credit Lyonnais Laing said buy and Smith New Court's profit explosion added 4p to 373p.

Pilkington, on stories that it had abandoned plans to float its Australian offshoot, cracked 2.5p to 176.5p and British Gas remained under pressure following the Ofgas pronouncement, falling a further 3p to 268.5p.

Thorn EMI weakened 14p to 1,064p as a large line of stock sought a home.

Unigate remained strong, up 4p at 391p, prompting thoughts about a bid for the Hazlewood food group, up 4p to 136p.

Amberley, the stone preservation group, held at 52p. Roger Brocklebank, at the stockbroker Albert E Sharp, is forecasting profits of pounds 1.99m this year and pounds 2.54m next and regards the shares a buy. The group is taking over Metacol, a producer of liquid pigments, for pounds 5.5m in cash and shares.

Manchester United rose 4p to 609p. Martin Edwards, chief executive, picked up 70,000 shares. Tottenham Hotspur, appealing against the FA punishment, gained 3p to 83p.

The FT-SE 100 index lost 15.7 points to 3,030.1 and the FT-SE 250 index 25.5 to 3,534.2. Turnover was 610.1 million shares with 24,080 bargains recorded. The account ends today with settlement on 27 June.

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