MARKET REPORT US rise pushes shares to seven-month high

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Shares surged to their highest level for more than seven months as a late rally pushed the FT-SE 100 index above 3,150 points.

At one time it looked as though the heady advance that started 11 trading days ago was running out of steam. Then New York staged a dramatic opening, surging above 4,100 points for the first time.

Although it is generally accepted that New York does not influence London as much as it used to, such a pulsating performance was bound to impress the stock market. Consequently the index, at one time down 6.8 points, ended with a 17-point bound to 3,153.4.

Since the bull run started, the index has climbed 166.5 in often busy trading. Bed and breakfast deals continue to distort the turnover figure, but even allowing for the yearly flood of tax-efficient transactions there is little doubt that investor interest has been reawakened and a neurotic market transformed.

The New York cheer stemmed from figures suggesting a further slowdown in economic growth, reinforcing the feeling that US interest rates could have peaked.

Much of the opening attention was directed at electricity shares, as Professor Stephen Littlechild, the industry regulator, confirmed the likelihood of tougher price controls from April next year. His proposals are expected in June.

Northern, which prompted the Littlechild rethink with its give-away defence against the hostile Trafalgar House bid, fell 10p to 735p. The first Trafalgar offer was 1,150p. Yorkshire Electric, backed heavily on hopes of a Hanson bid, lost 9p to 630p.

Waters, with UBS and James Capel positive, rose higher, with Thames up 7p at 495p.

Medeva was again high on the takeover drug. The shares jumped 11.5p to 224.5p, around the level they enjoyed before a shock profit warning in the summer of 1993 sent them crashing to a 102p low.

The shares have romped ahead from 177p since the start of the month, with the group's improving trading position and takeover talk spurring the progress.

There have been strong rumours in New York that Medeva's days of independence are numbered. Fisons, itself an old bid candidate, has been put forward as a likely predator.

AAH, the health group where the German GEHE group has mounted a 420p- a-share offer worth £377m, edged forward a further 2p to 431p as the market awaited improved terms.

Rolls-Royce was unchanged at 164p after duly producing its £331m cash call, a placing and opening offer.

Unigate, ahead of analysts' meetings, said it had been forced to trim its milk operations, pushing the shares 5p higher to 377p. Northern Foods, cutting 2,200 jobs, fell a further 3p to 194p.

Guinness remained strong, up 16p to 454p, following its figures and a hint of a share buyback, drawing other drink shares higher.

Lasmo, the oil group which last year resisted Enterprise Oil, gained 6p to 161p. Some suspect Enterprise will come back with a higher offer later this year. In the meantime Nomura, the Japanese investment house, rates the shares a buy.

Financials continued to attract attention. Perpetual, the fund manager, shot ahead 47p to 1,360p, a peak; Smith New Court gained 10p to 472p. Union, the financial services group where a US fund manager has built a 3 per cent stake, improved 7p to 82p on suggestions that it could find itself involved in bid action.

Southern Business, the photocopier distributor, rose 6p to 69p as a second bidder, in the shape of Danka Business, duly emerged.

But the initial bidder, Berkeley Business, is not giving up. The Danka offer is 70p cash against Berkeley's cash and shares mixture.

Bid speculation swept to MR Data Management, lifting the shares 7p to 111p. Hays, regarded as a possible bidder, put on 5p to 300p. Wace, the printer, with figures due, gained 17p to 240p.

Acorn Computer, in the throes of a £17.2m rights issue, held at 86p. There is talk that its Advance Risc Machines associate is about to announce a big contract for its microchips. Magnum Power, raising £2.4m, rose 6.5p to 132.5p.

Black & Edgington, the marquee group, raised £900,000 through a placing at 3.5p. It is looking at a number of acquisitions.

The shares held at 3.75p with the market speculating about a £10m drugs deal, financed by convertible stock, being near to completion.

Tadpole Technology also pulled in cash - £2.5m via a share placing at 201p. The shares gained 12p to 224p.

Filtronic, a maker of mobile telephone parts, moved ahead 13p to 267p in occasionally busy trading. Three institutional shareholders were said to be topping up their holdings. Panmure Gordon, the stockbroker which launched the company at 105p in October and took part of its fee in shares, is thought to be preparing an investment note.

Still they arrive on the 4.2 share market - latest is Central Railway. It hopes to raise up to £1.5m with a £450,000 minimum by offering shares at 100p. Plan is to develop a rail link connecting the Midlands and London with the Channel Tunnel. The cash is needed to gain parliamentary support for the £2bn venture, described as having "very high risks".

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