Market report: Telecoms dial up a late blue-chip rally

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The Independent Online
TELECOMS PROVIDED the stock market hot line. Another giant US deal and a near universal chorus of analytical acclaim for Orange helped generate a late blue-chip rally, although most of the stock market under- card remained sadly neglected.

After wallowing in negative territory for most of the session Footsie came to life in the final 30 minutes, ending 32.9 points higher at 5,804.9. In contrast the mid cap index, higher for much of the day, closed lower, its 11th consecutive decline. The small cap index also retreated.

AT&T's $48bn swoop on Tele-Communications, America's largest cable company, provided yet more evidence of the consolidation upheaval which is sweeping through the telecoms business. There had been widespread expectations that AT&T would link with BT, prompting the British group's shares to romp ahead in the past few days.

At first the Tele-Communications move was seen as reducing any chance of a BT deal and its shares were at one time down 23p. Second thoughts soon prevailed. Any AT&T interest in forging an alliance, perhaps even contemplating a merger, with BT, is unlikely to be reduced by its latest adventure. After all BT could still provide a powerful European connection, something not in the gift of Tele-Communications.

So BT, in busy trading, ended 17p higher at 758p with not a solitary sell order remaining on the order book at the close.

Orange, following its presentation and tariff changes, was the best performing Footsie stock, gaining a further 40.5p to 645.5p; Cable and Wireless jumped 32p to 690p with hopes that its MCI Internet deal will be revived and Vodafone improved 15p to 775p.

Telewest Communications, the cable group, surged 29p to 159p. It is partly owned by Tele-Communications which is, following the AT&T deal, likely to give way to the other major US shareholder, US West.

Psion's superphone was the other influence. The hand-held computer group has linked with Ericsson and Nokia to create new all-purpose phone. Motorola will join shortly and the joint venture, Symbian, is likely to be floated on Nasdaq. Psion shares surged more than 50 per cent to 423.5p.

Other communication shares to get caught up in the euphoria included JWE Telecom, up 16p to 145.5p, and Colt Telecom, 167.5p to 2,282.5p. Even troubled wireless telephone group Ionica managed a 3.5p gain to 31.5p.

The excitement also embraced a whole range of computer shares. Misys, the sector's only Footsie constituent, rose 105p to 3,615p; Sage 167.5p to 1,712.5p, and Logica, helped by a presentation, 105p to 2,062.5p.

ARM, on the verge of joining the FTSE 250 index, gained 62.5p to 955p. It is thought to be the most likely supplier of microchips for the Psion venture.

Footsie progress was helped by BG's 14.5p advance to 344p following its Tunisian gas developments. PowerGen, up 23p to 826p, was enlivened by suggestions it may buy East Midlands Electricity from Dominion Resources, the US group which acquired the regional electricity company last year. The generator is known to be keen to take on distributor. Viridian, the old Northern Ireland Electricity, dimmed 25p to 564p after failing to overturn price controls imposed in August last year.

Disappointment over the Great Universal Stores figures lowered the shares 43p to 807p and Stagecoach completed an unenviable hat-trick, falling for its third day since it arrived in Footsie. Lack of enthusiasm for the deal with Richard Branson, which gives the bus and train group a 49 per cent interest in Virgin Rail, is behind the three-day fall which has clipped 135p from the shares.

Sterling's relentless strength continued to weigh heavily on currency- sensitive stocks with BTR, LucasVarity and Siebe down.

Imperial Chemical Industries, down 34p to 1,000p, suffered from profit downgradings following meetings with analysts. Diageo, off 5p at 708p, was the casualty of Lehman Brothers caution.

Oils made headway on reports that Opec had agreed production cuts. British Petroleum rose 22.5p to 890p.

It was another unsettled day for British Biotech with the shares falling 7p to 30p, a five-year low. The company, which must be the smallest on the order book, was the subject of a steady stream of small sell orders.

Blacks Leisure fell 30p to 292.5p after a series of institutional meetings. The message from the sports goods retailer was apparently upbeat but could not prevent a bout of modest selling. DFS Furniture shaded 1.5p to 197.5p as Michael Kirkham, son of founder Sir Graham, acquired 5 million shares; Lord Harris, chairman of Carpetright, was also in the market, buying 50,000 shares of the carpet retailer, lifting his pile to 16.22 per cent.

Computer group Azlan, which has received takeover approaches, gained 16p to 72.5p and Eidos, the video games maker, jumped 75p to 845p; it declared its intention of seeking acquisitions.

Lynx, a computer group, held at 205p after Henderson Crosthwaite issued a buy signal. Superframe, the acrylic shop-fittings maker, held at 22p. Everett Financial has emerged as a 6.86 per cent shareholder; on Tuesday Dean Corporation lifted its stake to 29.45 per cent.

ISA INTERNATIONAL, the distributor of computer supplies which has found trading tough, has collected a new shareholder. David Heap has acquired a 14.86 per cent stake. He is unconnected with the company but is the brother of deputy chairman John Heap. ISA shares firmed to 45.5p; they were nearly 200p a year ago.

JD WETHERSPOON was little changed at 292.5p. BT Alex.Brown has lowered its profits forecast largely because the group does not have television sets in its pubs and is unlikely to benefit from World Cup coverage.

REGAL HOTELS has attracted Bonham Industries, which has declared a 3.71 per cent stake. The shares slipped 1p to 39.5p. They touched 51p last year.

SEAQ VOLUME: 909.7 million SEAQ TRADES: 61,221 GILT INDEX: 105.25 +0.33