Market Report: Supermarkets bounce back on investor support

SUPERMARKETS, battered and bruised as some took fright and cut their holdings, are suddenly enjoying shopping trolleys of investment support.

Worries that profit margins were being squeezed and supermarkets were losing their inflation profits prompted many analysts to reduce their forecasts.

The J Sainsbury interim figures and accompanying comments did nothing to ease the air of depression. The wall of worry put supermarket shares, which had stood up well in the stock market slide, on the ski slope with most other retailers.

Investment group ABN Amro helped the sudden bounce by producing a generally positive review of the sector. Then Somerfield appeared to add to the more relaxed atmosphere by updating analysts on its progress in absorbing its Kwik Save acquisition and indicating the combined group's sales were in line with expectations.

Somerfield, once the Cinderella of the supermarket world, was the recipient of a clutch of buy recommendations from the likes of Warburg Dillon Read and BT Alex.Brown. Dresdner Kleinwort Benson was another making favourable comments. It was enough to lift Somerfield 26p to 425p.

ABN repeated its view that J Sainsbury is a buy and Safeway was described as "undervalued". But ABN, the old Hoare Govett, does not think too much of Asda shares, suggesting they are a sell. Tesco rose 8p to 176p and Safeway put on 4p to 294p. Sainsbury's gained 16.5p to 550p. And Asda? The shares ignored the ABN advice and climbed 7p to 163.5p.

The supermarketeers' strength was the outstanding feature of an uncertain stock market. Only the second and third liners managed to put on positive displays.

Footsie had a volatile time. At one time it was up 95.5 points, reflecting New York's overnight strengthening following the neutral speech from Alan Greenspan, the US banking chief.

But blue chips were found wanting, although ending with a modest gain. They lapsed into the red in early afternoon and it took a moderate New York-inspired rally to produce an 11.2 gain to 5,491 at the close. But the mid cap index improved 13.3 to 4,942.1 and the small cap 5.7 to 2,966.7.

Halifax and Prudential Corporation provided much of the action following The Independent's report of looming bid activity. Halifax, at one time 38p higher, succumbed to profit taking and ended 8p off at 839p. The Pru, 20p up in early trading, finished at 829p, up 7p. Both shares were heavily traded.

Banking shares were generally lower with Standard Chartered suffering a 51p fall to 639p; Barclays lost 44p to 1,235p, and Abbey National, linked with the Pru in the past, 32p to 1,158p.

Insurances were hit by Goldman Sachs, which cut its estimates for four insurers following the poor figures from Royal & Sun Alliance. CGU, reporting third-quarter figures next week, rose 1p to 920p.

British Aerospace, 10.5p lower at 453.5p, was the victim of a Merrill Lynch caution. British Airways, interim figures on Monday, was again under pressure falling 8p to 405p.

Unilever, after third-quarter figures, gained 19p to 609p.

Mirror, the newspaper publisher, attracted speculative attention. The shares jumped 12.5p to 159p in busy trading. BICC, the cable and construction group, was another under the takeover spotlight, improving 5p to 54p. Wace, the printing group, was another in demand. The shares jumped 9.5p to 36p on talk of a US approach. The bid was rumoured to be 50p a share.

Metrotect, a chemical group, provided the day's main profits warning and fell 7p to 19.5p as a result. The group, involved in pipeline protection, said half- year profits would be down, blaming the strong pound and deteriorating markets. Lower interim profits from Tex, an engineer, lowered the shares 24p to 61.5p.

Parity, the computer group, rose 21p to 410p after telling the market it had got it wrong. Cautious comments earlier this week from Lorien, a similar business, put Parity under pressure and the shares slipped from 432.5p. But the company said it was continuing to "trade well'' and to see a good market for its services in Britain and overseas.

Publisher Bloomsbury was little changed at 153.5p. Teather & Greenwood regard the shares as a buy, suggesting a 220p level. Profits are expected to climb to pounds 1.65m this year and reach pounds 3.1m by the year 2000.

C&B Publishing rose 10p to 115p after co-founder Mark Collins quit. He is talking to directors and others about selling his 550,000 shares and a further 125,000 which will be created when options are exercised at 90p a share.

Selfridges, the department store demerged from Sears, firmed 2p to 211p. British Land, the best-performing Footsie share with a 39.5p gain to 522p, is still on the prowl.

It has increased its stake by buying 1.1 million shares, lifting its shareholding to just over 7 per cent. A takeover bid for the Oxford Street store is looking increasingly likely. As far as British Land is concerned Selfridges is probably an asset play. After the demerger the shares fell below the suggested assets value.

Oil group XCL jumped 48p to 207.5p following keen interest in the US.

SEAQ VOLUME: 866.3M

SEAQ TRADES: 65,147

ANOTHER PROFESSIONAL football club has come to market. Bradford City Holdings, the parent company of the first division club, has joined the fringe, lightly-regulated Ofex share market where Arsenal, Glasgow Rangers and Manchester City are already traded.

The shares managed a modest gain - improving 0.5p from their 50p placing level. The club is valued at just over pounds 16m. It has recently improved facilities through a development to seat 18,000.

FIBERNET, with a national communications network of fibre cables, surged 69p to 376.5p after admitting it was considering an alliance with a bigger group.

It said it was reviewing its strategic options and one possibility was forming a link which might "result in an offer being made for the company". No discussions about a bid are taking place, it added.

Fibernet shares have been active this week on rumours of corporate action; they touched a 508p peak in the summer.