Nervousness about Christmas trade shakes retailers; MARKET REPORT

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The Independent Online
Judging by the crowded state of the country's high streets a bumper Christmas is in sight. But such thoughts did not win unanimous support in the stock market yesterday as retail shares retreated, with some dealers fretting about the array of pre-Christmas sales and reports that one retailer had expressed disappointment with the level of trade.

The Christmas unease was shrugged off by NatWest Securities. Analyst Sean Eddie described the reaction as "an attack of traditional Christmas nerves". Today's November retail sales figures were another unsettling influence. Governor of the Bank of England, Eddie George, felt trade was building up as expected and the UK would indulge in its best spending spree since 1988.

The cautious stance appeared to come from Bentalls, the department stores group. No comment was available from its main store at Kingston-on-Thames but there was talk the more sobering Christmas tale had emerged during a meeting with analysts.

Next, as if to steady market anxiety, let it be known it would not engage in pre-Christmas price cuts and was trading well. In busy dealing Next was down 15.5p, settling at 553p, off 9.5p.

Other leaders lower included Burton (3.25p to 149.25p); Argos (10p to 747.5p) and Dixons (6.5p to 533p). Bentalls was unchanged at 129.5p.

The rest of the market had an uneventful session with Footsie down 14.2 points at 3,979.6. Volume was swollen by tax-efficient bed and breakfast deals. Takeovers, real and rumoured, provided much of the action. Insurances remained the centre of attraction with Commercial Union again leading the charge, up 13p to 693p, another peak. General Accident put on 21p at 716.5p. Among insurance brokers Willis Corroon gained 5p to 140.5p. The shares were 118p last month.

The bids which did arrive came from engineers Fairey and FKI. Fairey offered pounds 51m for Burnfield, a quality control equipment group, and FKI followed its signalled interest with a pounds 196m offer for building materials group Newman Tonks. Both offers were rejected. Burnfield moved up 36p to 136p against the 135p offer and Newman jumped 20.5p to 149.5p, around the bid level.

The 18 million Severn Trent share buy-back, conducted by HSBC James Capel and UBS, left the price up 13.5p at 667.5p against the 675p buy-in. The action encouraged Thames Water 18p higher to 586.5p.

BSkyB, on the Government's digital rules, rose a further 29p to 518.5p and media group Pearson, ahead of a trading statement today, slipped 11.5p to 689.5p. Rank, another where a trading statement is expected, shaded 3.5p to 430p.

British Aerospace continued to shrug off the Boeing take-over, rising 19p to 1,155.5p. The feeling is the US deal could provoke a more competitive edge in Europe, particularly at BAe associate Airbus Industrie.

British Gas fell 6.5p to 223.5p. ABN Amro Hoare Govett, the company's stockbroker, cut its target price by 20p to 220p ahead of an investment presentation due tomorrow. Hoare also trimmed its Imperial Chemical Industries estimates, leaving the shares 6p lower at 767p.

Shell weakened 10p to 972p on worries about its Nigerian involvement and Lasmo was little changed at 219.5p as Merrill Lynch posted a 250p target price.

Compass, the contract caterer, fell 8p to 612p; Accor, the French leisure giant, trimmed its shareholding by 6 million shares and rests with 21.53 per cent, approximately the level it intends to retain.

Sherwood, the clothing group, again had that threadbare look as its shares fell 17p to 41.5p on another profits warning. But Coats Viyella reversed an early fall to close 5p higher at 127p after a cautious trading statement was seen as less pessimistic than feared. The Sherwood setback ruffled Courtaulds Textiles, off 10p at 221p.

Highams, a business services group floated at 72p on Monday, had another strong run, romping ahead 34p to 121.5p. Oxford Biomedica again strived to close the gap on its 88p placing price, moving ahead 5p to 55.5p.

Lanica Trust's remorseless progress seemed to gather pace; the shares surged a remarkable 172.5p to 1,150p after touching 1,200p. They were 56p in the summer, before Andrew Regan and friends acquired control. It has fixed up a mail order deal with the NAAFI and there is talk of links being established with Littlewoods. The behaviour of the shares should prompt the Stock Exchange to insist on a progress statement.