Market Report: Transatlantic fears put an end to early advance

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The Independent Online
SHARES made an uneven start to the year. The torrent of bullish surveys provoked an early advance, but futures selling on fears of a transatlantic interest rate increase quickly eroded confidence.

There were, for the first time for some months, signs that Americans were prepared to trim their shareholdings.

Activity was not heavy, but they appeared to be selling futures contracts and possibly some underlying shares in the cash market.

With the latest Whitehall figures and the US fears lowering the temperature for interest rate cuts, and an acute stock shortage still to be cleared, the temptation to push shares lower had at one time cut the blue chip FT-SE 100 share index by 38 points.

Some even wondered whether a ragged retreat was imminent. But a firm New York start and some determined bargain-hunting had cut the fall to 9.9 at 3,408.5 by the close.

The firm market undertone was highlighted by an 8.1 gain to 3,799.4 by the supporting FT-SE 250 index.

Trading was, on the surface, impressive with Seaq putting volume at more than a billion shares. But a placing of the Wakebourne rights rump inflated turnover. The cash call received a 68 per cent take up.

The unclaimed stock was sold by stockbroker Williams de Broe at 1.125p a share. The rights was at 1p.

Seaq put Wakebourne volume at 404 million shares. The price of the computer group, until recently known as Maddox, doubled to 3p.

Besides the clearance of the rights overhang Wakebourne was among the deluge of New Year tips. Trafalgar House, up 14p to 107.5p, was another.

RTZ, the mining group, also a New Year selection, jumped 32p to 844p. The strong gold price helped; so did repeated suggestions that the recently launched Mercury World Mining Trust, which pulled in pounds 425.8m from investors, was steadily stakebuilding.

The bullion price pushed most gold shares higher with Bakyrchik Gold up 60p at 380p.

Media and television shares firmed on the Government's intention to free the restrictions on combined publishing and TV interests. Anglia TV rose 5p to 433p and Yorkshire 18p to 174p. Carlton Communications, with 75 per cent of its Central Independent TV target, was little changed at 947p. Pearson gained 11p to 619p and Reed International 24p to 920p.

United Newspapers rose 5p to 654p.

Oils were unsettled by attempts by Opec to arrange a meeting to discuss crude prices.

Eurotunnel put on 20p to 630p on the banking approval for its fund-raising. But the threatened cross-Channel price war left P&O 8p lower at 638p.

BTR, the conglomerate, weakened 15p to 358p. Alan Jackson, chief executive, raised more than pounds 1m by selling 275,000 shares (almost half his holding) at 374p.

After the sale was known, James Capel moved its BTR recommendation from buy to hold.

BAT Industries was another under the Capel influence. The stockbroker has cut its profit forecast for the year just ended from pounds 1,780m to pounds 1,720m. The US cigarette price war loomed large in the Capel calculation. The shares fell 2.5p to 551p.

Vodafone was spurred by the latest mobile telephone connections. December's figure, 52,500, pushed the total to 1,051,000. The shares rose 13p to 607p.

Mirror Group Newspapers gained 2.5p to 170p after the pension deal with Bank of America.

The settlement was seen as helpful to the Invesco investment group which faces MGN pension claims. It was up 13p at 202p.

Reckitt & Colman, the household goods group, fell 12p at 710p, ruffled by negative comments from UBS.

SG Warburg, the securities house, lost 23p to 908p on worries about litigation from Yeoman International Group, an Irish leasing operation.

Rothmans International fell a further 11p to 468p following the failure of the proposed merger of two of its Far Eastern offshoots. It is expected new recommendations will be put forward that some fear will be less favourable to Rothmans.

Owners Abroad held at 81p. There were rumours in the travel industry that it plans to demerge its Air 2000 airline. A management buyout is the rumoured route.

T&S Stores, the confectioner and tobacconist, was unchanged at 147p. A million-plus agency cross at 143p intrigued the market.

Alliance Resources, the little oil group, held at 6.5p. It is apparently keen to take over Petroceltic, an Irish resources group that plans to come to the market in the next few months. Pan Andean Resources, which is traded on the 535 market, is also anxious to acquire Petroceltic.

Exploration Co of Louisiana rose a further 4p to 41p on its proposed sale of Chinese exploration interests.

Ennex International, the Irish group, is reported to have obtained approval to develop its Scottish gold prospect at Coronish, Stirling. There is talk that it will have to make a big deposit, returnable when the mine is closed and the land reinstated. It would be the first gold mine in Scotland this century. Ennex shares, active recently, rose 1.25p to 14.75p.

Word is that Next, the once ailing retailing group, enjoyed exceptionally good Christmas trading. Smith New Court has lifted its profit forecast from pounds 65m to pounds 70m. The shares, once down to a miserable 11p, rose 6.5p to 238p. They may have much further to go as the group continues to increase its institutional share base. SNC believes the shares are a buy.