Market report: Utilities storm ahead despite South West Water shock

Utilities took the stock market by storm, paying little attention to the shock decision to block the twin takeover bids for South West Water.

East Midland Electricity once again led the charge. The conviction that a US strike is imminent remains strong with talk of a 700p-a-share bid being announced on Monday.

The shares are well below the 788.5p achieved nearly a year ago and are, therefore, susceptible to an old-fashioned ramp.

But, in defence of the bid rumour, there is no doubt there has been determined buying and many in the stock market believe East Midland is destined for corporate action. The shares surged 42.5p to 560.5p. Others joined the melee.

London added 22.5p to 590p; Northern 16p to 520p; Southern 12.5p to 630p and Yorkshire, where bid rumours once hit a high voltage intensity, rose 26p to 743.5p.

Even the English generators got in on the act; National Power added 10p to 394p and PowerGen 15p to 487.5p. National Grid's surrender to industry watchdog, Professor Stephen Littlechild, encouraged the shares 4.5p higher to 178.5p with buyers attracted by the company's comment it will continue with a progressive dividend policy.

The decision by Ian Lang, President of the Board of Trade, to block the Severn Trent and Wessex Water offers for SW Water, seemed to increase the electricity excitement. It was reasoned in some quarters that the Government's action against domestic predators could encourage overseas bidders who have in the past encountered little Westminster resistance.

SW Water was predictably the day's main casualty, sinking 130.5p to 575p. The frustrated bidders rose with Severn up 30p to 605.5p and Wessex 25p to 342.5p.

Among others Hyder gained 11.5p to 684p and Thames 6p to 537.5p.

The rest of the market managed a firm rally after its three-day retreat. Footsie gained 23 points to 4,022.4 with bid speculation and a firm gilts performance helping sentiment.

BSkyB, at one time down 21.5p, ended 3.5p lower at 593p and HTV, where United News & Media has acquired a 19.9 per cent stake, put on 11.5p to 385p. Scottish TV, seller of the HTV interest, lost 9p to 753.5p. Emap, the publisher, continued to suffer from its unseemly boardroom split, falling another 16.5p to 696p. Border, thought to be the most likely Scottish target, gained 3.5p to 287.5p.

Pearson advanced 21p to 732.5p, with, for a change, hopes of a television demerger replacing bid speculation

Pet City scurried 220p higher to 560p on the surprise US offer and SR Gent, the clothing firm, continued to benefit from its bid approach, putting on 11.5p to 74p.

My Kinda Town, the restaurant chain, duly confirmed a bid interest, managing an 8p gain to 171.5p.

British Biotech continued its recovery ahead of next month's important medical conference in Vienna. The shares advanced 16.5p to 236p.

BAA, the airports group, again scored from the Civil Aviation Authorities much-as-expected measures, rising 10p to 529.5p.

J Sainsbury, the superstores chain, enjoyed a late rally, up 11p to 361p on its proposed move into banking with Bank of Scotland, up 5p at 283p. The retailer's interim figures are due next week; they are expected to show a sharp profits fall.

Great Universal Stores fell 17.5p to 617p after pointing to static interim profits and Dixons lost 15.5p to 568.5p on Credit Lyonnais Laing caution.

Verity, ahead of meetings in Japan, rose 2.75p to 37.25p, a peak. There is also talk of institutional meetings in this country next week. A Far Eastern group is thought to have finished selling and there is speculation the group may demerge its revolutionary, wafer-thin sound system which has caused the excitement. Since the summer the shares have risen from 10p.

Newcomer Beechcroft, a retirement homes operation, floated at 3p. In busy trading the shares settled at 4p.

Petroceltric improved 5p to 35.5p following an agreed Irpounds 3m share exchange bid from Dana Petroleum. Dana edged forward 0.75p to 16.25p.

Porvair, making synthetic materials, rose 6.5p from near its year's low to 236.5p after Butterfield, the stockbroker, said buy. It suggests the 47 per cent share collapse was an over-reaction to poor interim results and US selling.

Profits this year are expected to improve pounds 1.1m to pounds 6.2m, although earnings per share will be down, and move to pounds 7.5m next year.

TAKING STOCK

o Action at showbiz tiddler Galaxy Media, unchanged at 140p. John Webber, a vice-president of Mark McCormack's International Management Group, has become chief executive and is buying 150,000 shares at 135p. Galaxy is also taking over Mr Webber's BM International operation.

o Castle Mills International, the textile group, has attracted a raft of significant shareholders through its restructuring. Some will be revealed next week. The company is thought to be working on several acquisitions.

o Betacom, the electrical group where Alan Sugar has become a director, gained 2.25p to 21p. There is talk of a 30p-a-share bid from Mr Sugar's Amstrad group which already controls the company.