Market Report: Three routes possible for expected Do-It-All deal

BOOTS and W H Smith are rumoured to be close to completing a deal over their jointly-owned Do-It-All retailing chain.

Stories in the stock market suggest ownership of the troublesome do-it-yourself business is about to change, with Boots buying out Smith's half share or both parties giving up the struggle and selling to an unrelated buyer.

A third possibility, as they juggle the options to get the business on its feet, is the sale of 70 of the least viable of the 220 outlets.

Boots shares fell 3p to 539p and Smith 8p to 496p.

Boots and Smith's Do-It-All embrace goes back to 1990 when they merged their do-it-yourself operations, forming Britain's third largest business after Texas (Ladbroke) and B&Q (Kingfisher).

But they have found it an uphill struggle as the recession eroded sales. Both have been re-examining their operations. Boots wants to sell its drugs division and Smith aims to concentrate on its core businesses.

The rest of the stock market started the three-week account on an unconvincing note. The FT-SE 100 index was down 27.6 points to 3,106.1 with the supporting FT-SE 250 index lowered 21.9 to 3,767.6. Trading was subdued.

Kenneth Clarke's Washington comments weighed heavily on sentiment. His enthusiastic remarks on economic growth, underlined by GDP figures for the first quarter, appeared to destroy any lingering hopes of any early interest rate cut.

The G7 interest in derivatives was also viewed as an inhibiting influence.

Government stocks turned in another miserable display. Although early falls were trimmed they suffered losses of about a point. Weak European bond markets and tomorrow's gilts auction helped to ruffle sentiment.

Electricities remained under the Littlechild whip. Friday's leaked letter, outlining the regulator's thinking about a much tougher pricing regime which would ease electicity bills but hit profits, produced another display of double-figure falls.

Eastern fell 16p to 600p, Manweb 20p to 672p and Southern 21p to 580p.

Oils were firm as the crude price hardened. Lasmo, however, did not require any pricing encouragement. It is caught in a frenzy of takeover speculation with the shares improving 8p (after 11p) to 155p and the nil-paid rights 8p (after 12p) to 50p.

Enterprise Oil, down 3p at 445p, PowerGen, 7p lower at 484p, and the French-owned Total group remain the favourites to strike. The speculation has flared since Lasmo launched a pounds 219m rescue rights issue nine trading days ago.

Since then, in often heavy trading, the ordinary shares have come up from 128p and the nil-paid from 18p. Turnover was again high - Seaq put it at 18 million for the ordinary shares and 7.1 million for the nil-paid.

And on the futures front Lasmo was by far the most heavily traded contract, with most deals looking for a higher share price.

Reuters' first quarterly statement, showing revenue up 17 per cent at pounds 513m, was well received and the shares rose 13p to 518p. The information group is holding an exhibition of its products in Geneva as well as investment presentations.

Pearson, another with a presentation, had the misfortune to fall 7p to 648p.

Tomkins, the engineering and guns conglomerate taking in the Ranks Hovis McDougall food group, was little changed at 246p. A presentation is expected this week and it is thought it is about to indulge in a round of stockbroker meetings.

Just to add to the activity, one house produced switch advice - from Williams Holdings into Tomkins.

Suter tumbled 10p to 191p on reports of a tax investigation. The conglomerate, bidding for James Wilkes, recently escaped the shadow of a Department of Trade and Industry inquiry.

Tesco, less a 5.3p dividend, fell 3p to 202p as Bill Myers at Yamaichi, the Japanese securities house, described the shares as a long-term buy. He expects profits this year to climb from pounds 435.5m to pounds 538m with pounds 570m likely next year.

Smith New Court injected a little life into chemical shares with an upbeat review. Imperial Chemical Industries, first quarter figures on Thursday, gained 3p to 832p.

Tate & Lyle held at 425p as S G Warburg switched its stance from hold to buy. Associated British Foods lost 15p to 583p on its figures but Moss Bros jumped 46p to 325p on its results.

Compass, the contract caterer where stock is thought to be on offer, slipped a further 8p to 329p.

Sherwood Computer Services jumped 23p to 115p. Its rival MMT Computing sent out signals of its interest, nudging its shareholding to 4.06 per cent, buying 25,000 shares. Last week Sherwood swung from profits of pounds 3m into losses of pounds 2m.

The account started with the FT-SE 100 index down 27.6 points to 3,106.1 and the FT-SE 250 index off 21.9 at 3,767.6. Turnover was only 522.3 million shares with 26,941 bargains. The account ends on 13 May with settlement on 23 May.

Talk persists of bid action at MR Data Management, the old Microfilm Reprographics. Shares of the data conversion and storage systems group moved ahead 5.5p to 208p in modest turnover. Profits were down at the halfway stage but the group is pinning its hopes on its Memex system aimed at police forces. It is Memex, believe the speculators, which could prompt interest.

Victaulic, the pipeline maker, edged ahead 2p to 306p. It has spent pounds 7.4m expanding operations in Spain and Singapore. Further overseas moves are expected. The management is holding investment meetings in the City and profit forecasts are being moved higher. About pounds 12.5m is expected for this year with pounds 14m next. UBS believes profits could reach pounds 16m in 1996.