Market Report: Zofran go-ahead sends pharmaceuticals soaring

DRUGS, for long the sick sector of the stock market, produced a sudden display of exuberance, encouraging shares to storm another peak.

It all started when Glaxo Holdings, worst hit in the savage downgrading of drug shares, said the US Food and Drug Administration had widened the use of the injectible form of the Zofran drug.

With stories filtering in from the US that the much-feared Clinton health reforms would be much milder than hitherto indicated, the lonely drug sector, where sellers had dominated, encountered unexpected friendly buying.

Glaxo advanced 36.5p to 558p; SmithKline Beecham 16p to 448p and Wellcome 34p to 678p.

It was the first time for a long while that drug shares, the worst- performing sector in the past year, had been among the market's leaders. Even Fisons, up 4p at 176p, and recent casualty Medeva, 2.5p stronger at 108.5p, joined the jamboree. Zeneca edged forward 3p to 663p.

Utilities provided the other main impetus. Yield considerations again attracted buyers for electricity and water shares. The long-awaited British Gas report by the Monopolies and Mergers Commission also rekindled hopes of a less oppressive regulatory regime. Thames Water rose 8p to 533p, a 35p gain this month.

Such inspirational performances were enough to register another record breaking run. The FT-SE 100 index rose 16.7 points to 3,025 and the FT-SE 250 index 6.5 to 3,465.9.

US interest was evident. Reuters, the information group, was one beneficiary, jumping 30p to 1,549p.

Once again trading was remarkably active for a holiday season day. Seaq put volume at 638.4 million, more than twice the level hit in the dog days before the UK's enforced exit from the European exchange rate mechanism almost a year ago.

British Gas was the centre of much of the activity following the MMC report. At one time the shares were nudging 340p as some contemplated the possibility that the parts could be worth more than the whole. But Gas's rather subdued trading statement and indications of an unchanged dividend took the shine off the shares and they closed with a 4p advance at 327.5p.

Kwik Save, sliced from 853p as food retailers have been savaged by competition fears, recovered 22p to 710p following a presentation at SG Warburg, which feels the hard- pressed sector offers investment value.

Grand Metropolitan felt the impact of stories that a substantial Japanese selling order was in the pipeline. At one time down 5p, the shares ended 2p lower at 451p.

Talk continues of a big pub sell- off, possibly the Chef & Brewer chain. Bass and Whitbread are regarded as the most likely buyers although some wonder about Scottish & Newcastle. Whitbread 'A', weak lately on competition fears, recovered 9p to 508p but Marston Thompson & Evershed, where there is talk that Whitbread and its investment arm may sell its shareholdings, fell 3p to 294p.

BICC had a difficult first hour as rights issue rumours continued to weigh. But gradually the view prevailed that the fall had been overdone and the shares, at one time down 10p, ended 20p higher at 417p.

Vodafone, after early profit-taking, ended 1p firmer at 532p following the AT&T and McCaw Cellular deal.

But the Securicor group, reflecting its involvement with BT's Cellnet mobile telephone network, came to life. Securicor rose 25p to 1,040p with its non voting 'A' shares up 34p to 736p. Its quoted off- shoot, Security Services, improved 33p to 635p. SS holds a 40 per cent interest in Cellnet, with BT accounting for the rest of the capital.

Tadpole Technology displayed a small, if belated, response to its Monday statement, improving 24p to 245p. The shares, floated at 65p, have been 364p this year.

BAA, the airports group, overcame initial weakness as it became known that ADT, the Bermuda- based Michael Ashcroft vehicle, intended to unravel its indirect shareholding, which could lead to 1.7 million shares being dumped on the market. The Ashcroft stake stems from a share build-up in the late 1980s. BAA, at one time 7p lower, ended little changed at 781p; ADT eased 2p to 658p.

Mirror Group Newspapers was firm at 181p. NatWest Securities suggests buying the shares, which 'represent the clearest valuation anomaly within the media sector'. The securities house says MGN offers the strongest earnings growth and yet the shares are on the lowest rating 'of the media majors'. They should be above 200p.

Aminex, the Irish oil explorer, continued to reflect its Russian connection, gaining a further 6p to 43.5p.

British Aerospace had an eventful session as doubts about the long- running Taiwan business jets deal resurfaced. The Taiwanese authorities appear to be having difficulty raising the cash to complete their part of the joint venture. At one time down 4p, the shares ended 2p firmer at 455p.

The engineer Fife Indmar's return to interim profits and the increased dividend lifted the shares 15p to 60p. Williams de Broe is looking for profits of pounds 1.2m this year against a loss of pounds 843,000.

More records: the FT-SE 100 index climbed 16.7 points to 3,025 and the FT-SE 250 index 6.5 to 3,465.9. Turnover was 638.4 million shares with 32,734 bargains. The account ends on 3 September with settlement on 13 September. Futures records inspired government stocks.

Whitegate Leisure, the discotheque and 10-pin bowling group that is one of the disaster shares of the leisure sector, is staging a comeback. The shares, which touched a 225p high in 1989, climbed 4p to 41p. They have been down to 4.75p. Interim profits were pounds 682,000 and comfortably more than pounds 1m should be possible for the year. The heavily-borrowed group wants to sell its healthcare side.

Galliford, the housebuilder expected to report sharply lower profits for the year ended June, rates a buy recommendation from Greig Middleton. Analyst Michael Foster expects profits to fall from pounds 3m to pounds 1.3m but return to pounds 3m this year. The group has pounds 5m cash, a cheap land bank and scope to more than double housing turnover. The shares, at 45p against a 38p year's low, are cheap, he says.