Market Report: Talk of bids and deals enlivens media sector

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MEDIA shares claimed the applause as the stock market contemplated more bids and deals and further evidence emerged of the front players scrambling to strengthen their positions.

Flextech's surprise descent on HTV set the tone. It is buying 20 per cent of the independent TV group for pounds 27m. Flextech is controlled by Tele-Communications, the biggest cable group in the US, which is planning a pounds 40bn merger with Bell Atlantic, the telephone group. HTV jumped 27p to 152p with USM-traded Flextech up 8p at 444p.

Yorkshire-Tyne Tees TV recovered 10p to 346p and Pearson, the rumoured bidder, jumped 20p to 720p. Reuters, helped by NatWest Securities support, gained 9p to 2,082p.

The rest of the market failed to register much enthusiasm for a surprise German interest rate cut and encouraging US statistics. At one time up 19.9 points, the FT-SE 100 index ended 7.6 higher at 3,425.3.

The German move failed to generate much buying interest and even a firm New York share display had little impact.

Nicholas Knight, who is with Nomura, the Japanese securities house, was probably the main bearish influence. Until yesterday he was the arch bull. But only a week after reiterating his view that the 100 index would end the year at 4,000 he cut his forecast to 3,500.

Salomon Brothers' Marcus Grubb, billing himself as the 'lone bull', repeated his view that the year-end outturn will be 3,950.

Mr Knight's changed stance stems from worries over interest rates and their impact on sterling. Mr Grubb, however, draws attention to indicated earnings growth and sees base rates at 4 per cent at the year-end.

Pilkington, the glass maker, rose 5p to 201p as it lifted glass prices by an average of 6 per cent. Unigroup, a building materials group, improved 5p to 41p on talk of a bid being lined up.

Glaxo Holdings' pounds 1bn profit performance lifted the shares 22p to 697p, helping other drug shares. Lloyds Chemists, with some help from the prescriptions increase, rose 12p to 359p with Goldman Sachs and UBS said to be keen on the shares.

Kleinwort Benson's sharp profit advance prompted profit- taking with the shares down 20p at 632p. Smith New Court suggested a switch into S G Warburg, down 8p at 945p. SNC was at one time 35p down following the sharp reduction in the damages awarded over the Ferranti share dispute with Citibank in 1989, but closed only 2p lower at 466p.

In Shops, following the pounds 58m agreed bid from Birkby, jumped 30p to 113p. Birkby rose 13p to 278p.

Associated British Ports edged forward 6p to 622p on SNC support. Unilever managed a 2p gain to 1,226p. NatWest said it was undervalued.

Lonrho dipped 3.5p to 160.5p as it confirmed a convertible bond issue. The amount involved is pounds 60m against market rumours of pounds 100m. Conglomerate Wassall rose 5p to 287p following a 2.75 million agency cross at 286p.

In a subdued oil sector Enterprise Oil lost 7p to 428p as worries that it may cut its dividend continued to unsettle sentiment.

Newcomer Clinical Computing made a strong start. Placed at 124p, the shares surged to 186p, closing at 173p.

Quadrant, the photo processing group, rose 4p to 41p as it confirmed a significant expansion. It is buying Yewland Engineering from Carlton Communications. A placing and open offer will raise pounds 4.1m.

Hartstone, the troubled hosiery group, eased 1p to 75p. Its deal with Courtaulds Textiles, down 5p at 574p, has run into a hitch.

There were flurries of activity among fringe shares. International Communication & Data jumped 2p to 12.5p following its swing from losses to profits. A possible bid from the privately owned PSB Group and its associates has been signalled.

Dragon Oil, in busy trading, rose 0.5p to 2.5p. There is talk of a Hong Kong share quote. Standard Chartered, the banking group, is said to be sponsoring the listing.

The company, created through a merger of Oliver Resources and Kirkland, a Norwegian resource group, has extensive Far East interests.

Kells Minerals, an obscure Irish resources group, rose 3p to 37p with a story of a 50p-a-share offer apparently going the rounds. There was also, for good measure, talk of an acquisition, a new name and even a new stockbroker coming on board.

Bolton, a textile group now largely a property business, rose 5p to 33p. The company, then involved in textiles, was once famed for its paper underwear.

Midland & Scottish Resources, ticking on until the oil runs out at the Emerald Field next year, rose 1.5p to 6p. It has been the subject of a company voluntary arrangement. Despite its obvious difficulties, some think of it as a shell.

The FT-SE 100 index swung from a 13.2 points fall to a 19-point gain before settling up 7.6 at 3,425.3. The FT-SE 250 index was up 3.7 at 4,054.3. Turnover was 701 million shares from 30,345 deals. The account ends on 25 February; settlement is on 7 March.

A revamping at Bullers, the giftware group, will lead to a savage dilution of existing shareholders. Auric Holdings, a Turkish group, will see its shareholding cut from pounds 1m to pounds 12,000. Bullers is consolidating its shares, raising pounds 2.56m through a placing and open offer and buying Clashfleet, a film and TV service business. Bullers shares held at 1.25p.

Kenmare Resources rose 1.75p to 15.25p as processing started at its Mozambique graphic plant two months ahead of schedule. Shipments start in April. Kenmare hopes the project will break even this year and move into profit next. It also has a mineral sands development in Mozambique which should be fully in play in 1996. Kenmare's shares hit 57p in 1989.

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