Market Report: US cavalry rides in to resuscitate flagging Footsie

Click to follow
The Independent Online
AMERICANS came to the rescue yesterday. The strength of the dollar is prompting transatlantic investors to look again at the London market, encouraging even drug shares to recapture some of their old appeal.

The FT-SE 100 index rose 17.9 points to 2,834.3 with four shares, each helped along by US influences, responsible for more than two thirds of the advance.

Glaxo Holdings, for long under the weather on US selling and rights issue fears, jumped 31p to 696p, SmithKline Beecham 20p to 466p and Wellcome 20p to 913p.

British Petroleum was the other main contributor to the index strength.

A better-than-expected statement, a dismissal of rights rumours and that continuing US interest pushed the shares - down to 192p last year with some forecasting a price of 165p - 11.5p higher to 277.5p.

The rest of the market was rather less enthusiastic. Rights issue worries and indications that interest rates will not be pulled lower left many blue chips a little subdued.

But trading was brisk. At least two programme trades were evident and, with some investment houses selling futures and buying in the cash market, share turnover reached almost 890 million.

One of the most actively traded shares was Trafalgar House as the rights issue duly materialised. But the accompanying trading statement was much worse than expected and the price fell 12p to 76.5p.

Fisons' sudden takeover appeal appeared to evaporate, with the price retreating 3.5p to 242.5p after Wednesday's excitement. James Capel reckon the shares are a sell, with a bid 'possible, but not probable'.

But Standard Chartered, the banking group, remained very much in the frame, up 14p to 645p. Many suspect that Lloyds Bank, due to report year's figures today, will mount another assault on Standard.

In 1986 Standard, with the famous help of the so-called 'white squires', managed to fight off a determined Lloyds bid.

As a legacy of that encounter Lloyds has a 4.68 per cent interest in Standard. Lloyds shares rose 13p to 528p. TSB Group, another rumoured candidate for the Black Horse bank, managed a 1p gain to 172p (after 175p).

Reuters recovered a little from its American drubbing, regaining 28p to 1,344p. But Storehouse could only manage a 1p gain to 185p after the slump caused by the surprise David Dworkin departure.

Nikko Securities suggest the shares are now a sell. 'We would like to see the shares below 170p before being tempted to become buyers again,' it added. NatWest Securities moved from buy to hold.

William Morrison held at 155p after Barclays de Zoete Wedd said buy. J Sainsbury fell 15p to 514p as a large line of stock hovered.

On the beer pitch Scottish & Newcastle was the latest downgrading victim. The shares fell 3p to 434p as BZW cut its profit forecasts. Its revised estimate is pounds 201m for this year, down from pounds 213m. For the following year its forecast has been cut from pounds 240m to pounds 218m.

British Airways was lowered 7p to 288p. Worries are growing that it made a third-quarter loss and the possibility of a rights continues to hover.

Union Discount held at 100p. After the close the company announced that the already long- running takeover talks continued. The discount group said they could, however, lead to UD emerging as the bidder. It is thought an overseas group is the unknown party involved in the negotiations.

British Steel improved 1.75p to 77.5p, with SG Warburg adopting a more positive stance.

Power shares brightened following the latest twists in the supply story. National Power rose 9p to 304p and PowerGen 10p to 306p. The regional distributors failed to hold their best levels, but even so many scored double-figure gains.

Waters also attracted support. NatWest Securities was the latest to draw attention to the sector's high dividend yield and said the Ofwat review should not be allowed to disturb sentiment. Smith New Court also made positive noises about water's appeal.

Motor World, which sells motor acessories and parts from 180 branches, made a top-gear debut, reaching 275p from the 210p placing price. Profits this year are expected to be pounds 3.7m. For the following year pounds 4.2m is forecast.

Clinton Cards rose 5p to 130p despite suggestions that Marks and Spencer is planning to emerge as a significant force in the cards business.

After two days in retreat, the stock market perked up yesterday with the FT-SE 100 index closing 17.9 points higher at 2,834.3. The FT-SE 250 index improved a more modest 4.6 to 3,006.5. Trading was busy with volume reaching 889.4 million shares and 33,737 bargains logged. Government stocks gave ground.

Trading started yesterday in the 50 million convertible preference shares issued by Airtours in connection with its hostile bid for its rival Owners Abroad. They promptly flew 4.5p higher to 104.5p as some decided to switch out of the ordinary shares, a subdued 1p lower at 180p. The bid has still to get Whitehall clearance. Owners shares rose 3p to 118p.

Interest is growing in European Motor Holdings, the old Cargo Control transport group now developing a garage network under the direction of Richard Palmer, formerly of Western Motor Holdings. It moved into the black at the interim stage and is expected to achieve profits of pounds 4.3m for the year to end-March against a pounds 1.38m deficit. The shares are 116p.

National Home Loans Corporation, the hard-pressed mortgage lender, is attracting speculative support. The shares improved 1.75p to 8p yesterday. The surprise decision to repay on schedule a Deutschmark loan is one influence. Another is buying of the group's convertible preference shares by the NHLC share option scheme. The shares peaked at 140p in 1990.

Comments