Market Report: Trafalgar victim of rumour in jittery sector

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The Independent Online
TRAFALGAR HOUSE, the leisure and building conglomerate, moved to quash a false rumour circulating in the market in early dealings yesterday that it was close to breaching banking covenants.

Trafalgar's already depressed shares came under pressure as the rumour spread, and the price dipped below 50p at one stage during morning trading.

The rumours, however, lacked foundation, with the company pointing out that it still had pounds 800m in cash and unused financing facilities. Its last annual report and accounts showed net assets of more than pounds 700m.

There is little doubt, however, that the City is concerned about Trafalgar's prospects in the construction industry. Output in the industry is poised to fall further this year and next.

Additionally, there is little sign of recovery in Trafalgar's hotel and cruise businesses.

Trading in Trafalgar's shares was busy with more than 4 million changing hands. The price closed 3p lower at 51p.

There were jitters elsewhere in building and construction stocks, resulting in the first week of the account ending in much the same vein as it started - on an unsteady footing.

Investors stayed away in their droves yesterday. Only 377 million shares had been traded by the close of business.

Gloom about the economy cast a heavy shadow over trading, while concern about sterling provided a chilling wind.

The market has sustained several blows to its confidence this week, and yesterday was no exception.

The National Council of Building Material Producers predicted that there would be no recovery in the industry until 1994 at the earliest.

It said recession in the construction industry was expected to deepen this year with output falling 8 per cent. Interest rates, it added, were likely to remain stuck at about 10 per cent for the rest of year, undermining trading conditions further. Earlier this week building employers forecast the loss of 40,000 more jobs this year.

Most of the main building companies fell as the NCBMP waded in with its predictions, and stayed down for most of the session before finding support in late dealings.

Tarmac fell 3p at one time, but closed a penny firmer at 64p. Similarly, RMC Group lost 4p in early trading and closed just 2p off at 487p.

Overall, the FT-SE 100 share index was negative for most of the day, venturing into positive territory for only the first five minutes of trading. The index closed down 12 points at 2,399.6.

Further softening in European bond markets unsettled gilts. Losses in long-dated issues extended to pounds 1.

Water companies were buffeted by a round of profit-taking. The main fallers included Anglian, down 5p to 383p, North West, off 10p to 402p, and Yorkshire, which shed 10p to 418p.

Electricity stocks were also weaker, although falls were largely limited to a couple of pence.

British Gas shares were a weak market as the company called for a full Monopolies and Mergers review of the gas business. Gas lost 6.5p to 240p.

Banks were uneasy. Lloyds fell 23p to 401p on interim figures, while Barclays, due to report next week, lost 5p to 314p. National Westminster slipped 7p to 318p.

Profit-taking unhinged Airtours, taking the price down 11p to 242p. Euro Disney had another torrid day, falling below 900p with a 33p slump to 875p.

Ratners initially gave up 1p on news that its report and accounts would be delayed, and that it was still in talks with its bankers. The price closed unchanged at 9p.

Gains made by Imperial Chemical Industries on the back of its demerger plans were eroded. ICI eased 8p to pounds 11.63p.

Cadbury Schweppes attracted attention. Talk of American buying and takeover speculation lifted the price 10p at one time. It ended at 465p, up 7p.

Manders climbed 10p to 239p as bid predator Kalon, unchanged at 90.5p, escaped an MMC investigation.

Hoare Govett and Lehman Brothers recommendations lifted London International 16p to 186p.

Fears over BET's rights issue, which closes on Tuesday, eased slightly. BET firmed 1p to close bang-on the 210p rights price.

Gibbs Mew continued to spurt ahead, putting on another 180p. Sir Ron Brierley said on Thursday that he was considering mounting a bid for the Wiltshire- based brewer of Bishop's Tipple.

Laporte was weak, losing 10p to 221p even after publicly squashing speculation of a boardroom rift after it announced the departure of Keith Samson, executive director.

Share prices ended the first leg of the account on soft ground. The FT-SE 100 index failed to hold above the 2,400 benchmark, losing 12 points to 2,399.6. A 4.1-point decline to 1,803.8 was recorded by the narrower FT 30-share index. Gilts were depressed, losing pounds 1 on the back of softer European bond prices

Changes to the FT Actuaries lists included the entry of three recent stock market newcomers. In have come Anglian Group, up 5p to 208p, MFI Furniture, unchanged at 120p, and Taunton, up 2p to 160p. Out are Cannon Street Investments, off 0.25p to 7.75p, Harland Simon, up 1p to 18p, Y J Lovell, down 2p to 8.5p, and Regalian Properties, 0.5p lower at 6.5p.

The personnel trading company D C Gardner is continuing to find support, particularly from the directors who have bought 160,000 shares. Languishing at 25p on Monday before Gardner reported a return to the black, the price gained another 4p to 38p yesterday. Profits of pounds 930,000 for the first half of 1992 compared with losses of pounds 2.83m last time round.