Market Report: Television bid leads to takeover mania

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TAKEOVER action, some real but mostly rumoured, inspired shares as prices surged again in busy trading.

The surprise bid for Anglia Television set the tone. Communication shares were, not surprisingly, the star turns with their exuberance quickly embracing the rest of the stock market.

A busy session left the FT-SE 100 index up 29.2 points at 3,437 and the FT-SE 250 index at its new peak, 4,013.3, a remarkable 64.5 gain.

Hopes that interest rates will soon be cut also helped sentiment. There were stories that Kenneth Clarke, the Chancellor, planned a cut this month.

Such talk helped government stocks, which also drew strength from the Bank of England's decision to auction pounds 2.75bn of new gilts at 6.25 per cent, dated 2010. The auction, due on 26 January, involves considerably less stock than many had expected.

Many of the communication shares that enjoyed the Anglia spell are constituents of the second-line index. Anglia, not a member, jumped 180p to 664p, with the bidder, MAI, improving 31p to 315p.

Among the media shares electrified were Carlton Communications, up 39p at 1,010p and Yorkshire TV, 15p higher at 201p. LWT (Holdings), as the feeling grew that the bidder, Granada, will be obliged to lift its offer, rose 7p to 675p.

Elsewhere in the media circus Daily Mail Trust rose 275p to pounds 119.50; Pearson 10p to 628p and United Newspapers 8p to 666p. But Reuters, with Merrill Lynch removing the shares from its buy list, fell 34p to 1,886p.

The Office of Fair Trading's probe into extended warranties on electrical goods hit Dixons and Kingfisher. Dixons, already weak after its poor interim figures, dropped 16p to 212p. Kingfisher, where worries of poor trading persists, lost 16.5p to 706.5p. The Domestic & General insurance group, deeply involved in the business, fell 50p to 1,698p.

Zeneca, the drugs group split from Imperial Chemical Industries last year, was also weak, falling 12p to 827p. It is expected to make a trading statement on Friday and there are worries that its pronouncement will fail to meet market expectations. Some turned cautious. The stockbroker James Capel was one. It is believed to have moved from hold to sell and cut its forecasts from pounds 800m to pounds 775m and from pounds 890m to pounds 850m.

Fisons ran out of takeover enthusiasm. With Swiss Bank Corporation said to be unloading shares the price fell 3.5p to 139.5p. Seaq put turnover at 13 million.

British Aerospace continued to lose height, down 23p at 391p. But Rolls-Royce, ahead of rumoured investment roadshows, gained 8.5p to 172.5p. BAA put on 15p to 1,060p. It could be hit today by the Government's review of airport regulations.

Utilities had a good session, with yield considerations mingling with expectations that more will follow the example of Eastern Electricity and indulge in a share buy-back exercise. South Western, up 19p to 668p, is thought to be the next in line. Eastern gained a further 20.5p to 664.5p.

Cable and Wireless was helped by the Hong Kong market and some bullish noises about its subsidiary, Hong Kong Telecom, by Salomon Brothers. The shares rose 12p to 519p. HSBC also felt the strength of the Hong Kong market, gaining 44p to 947p.

In the heady atmosphere some chunky lines of stock were easily absorbed. Sun Alliance, off 8p at 387p, almost accommodated a three million placing and Sears, the retailer, rose 1.5p to 123.5p as a 10 million line went through. Grand Metropolitan dipped 2p to 485p as, it appeared, a parcel of one million shares sought a home.

London International Group edged ahead 4p to 166p. Photo-Me International gained 10p to 295p. It is near to making a significant acquisition but suggestions it is about to take on LIG's troubled photo processing side are apparently wide of the mark.

Taunton Cider came to life, gaining 12p to 185p. There was talk one of the big drink groups may swoop. Burn Stewart, the Scotch whisky group, gained a further 5p to 130p on the back of the NatWest Securities recommendation.

Eurotunnel recovered early weakness on worries about its pricing policy. French buying left the shares 8p higher at 586p.

George Wimpey, the builder, improved 11p to 219p on a UBS buy recommendation. John Waddington, the games group, advanced 16p to 290p, reflecting talk that it planned to sell its games operation. Manders, the printing ink group, gained 7p to 405p. It is believed to have sold its Wolverhampton shopping complex for pounds 80m.

Butte Mining, little more than a litigation play, rose 0.75p to 5.5p. It is seeking damages from managers and promoters. Minimum claim is dollars 1bn which, if successful, would represent 129p a share. The shares were 2.75p three weeks ago.

The FT-SE 100 index surged 29.2 points to 3,437 and the FT-SE 250 index 64.5 to 4,013.3. Turnover was 964.9 million shares with 36,980 bargains. The account ends on 28 January with settlement on 7 February.

Holders of Proteus, the biotechnology group, received an unexpected shot in the arm. Shares surged 42p to 472p yesterday on a research and development venture with American Home Products, the third-largest drugs company in the US. Allied Provincial rates the shares a buy, noting that Proteus will retain the patents for the veterinary drugs it develops with AHP.

Waverley Mining touched 53p, closing 0.5p higher at 50.5p. The shares have climbed from 12.5p in the past year, helped by its interest in Montague Gold and various Australian operations. The stake in Kingstream Resources could be worth 20p a share. A planned interest in a Scottish coal mine is also creating interest. At the last count assets were 44.6p a share.

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