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Nervy Footsie unsettled by May Day poll prospects; MARKET REPORT

Shares showed signs of election jitters as John Major settled for a May Day poll. Footsie fell 51 points, its biggest decline for seven weeks, as the stock market prepared for what will be a long, fretful campaign.

Traditionally, equities experience volatile times in a run- up to polling day. One of the surprises of the past year has been the complete indifference the market has displayed towards the election and a likely change of government.

But such a placid attitude may be coming to an end. Although dividend payments contributed to the fall there was a feeling in some quarters that the first vibrations of old-fashioned election jitters had become apparent.

Still the impact was muted. With 11 of the 100 Footsie blue chips going ex-dividend more than 22 points were automatically stripped from the index. And the market also had to contend with a New York unsettled by the George Soros display of bearishness.

Footsie retreated to 4,373.3 with the supporting FTSE 250 index off 15.8 (making a four-day fall of 37.4) at 4,692.

The possibility of a Labour government has, of course, been occupying City minds for some time. There is a widespread view that a change of power is already factored into market values.

Chris Chaitow, chartist at Robert Fleming, has plotted that the market always falls under Labour and he believes the arrival of Tony Blair at No 10 could push Footsie down to 3,800 points by the autumn.

Although he has had to construct his own index to make the point, he believes the first Labour government presided over a 20 per cent fall in 1929/31; during the immediate post-war administration the decline was 3.5 per cent and the first Wilson government saw a 10 per cent retreat.

Under the last Labour government the market fell 10 per cent in real terms. "Labour has been bad for the stock market in actual terms because inflation has tended to be high," said Mr Chaitow.

Shares with a strong US following are likely to be vulnerable to a new government. Two showing signs of weakness were Glaxo Wellcome, off 29.5p to 1,110p, and Danka Business Systems, down 47.5p to 577.5p.

Imperial Chemical Industries, once the bellwether of Britain's industrial health, was a poor-performing blue chip. Nothing to do with the election; more a traditional profit downgrading. Kleinwort Benson did the damage, cutting its forecast for this year and the following two years and saying the shares were a sell. This year's forecast is lowered from pounds 650m to pounds 590m and 1999's from pounds 900m to pounds 840m. The shares fell 16.5p to 731.5p, the lowest for two years.

Lonrho is another under pressure on the profits front. It fell 12.5p to 145p after warning that sterling's strength could leave half-way profits down by a third.

ADT, Michael Ashcroft's security group which is based in Bermuda, jumped 272.5p to 1,610p as US industrial group Tyco International countered a hostile bid from Western Resources which already has 27 per cent.

Cable & Wireless added 5.5p to 511.5p on further speculation about the likely Chinese deal and Lasmo, strong on Friday, fell 5p to 251.5p as Societe Generale Strauss Turnbull said sell.

Sunderland's humiliating weekend defeat by Chelsea lowered the shares 35p to 617.5p. Renewed hopes of a higher offer lifted Capital Corporation 4.5p to 213p. Rank held at 439p with Lehman Brothers suggesting a 485p target.

Pace Micro Technology, which at one time seemed set to provide the Murdoch TV decoder box, lost a further 4p to 90p; the shares were 241.5p in November. Two profit warnings and the departure of one of its founders plus the failure of any Murdoch deal to materialise have devastated the shares.

Drugs were mixed. Cantab Pharmaceuticals rose 52p to 1,072p on talk of a vaccine development with Glaxo; results are due tomorrow. Scotia fell 22.5p to 422.5p but Shield Diagnostic managed a 5p gain to 672p after Friday's excitement. Chiroscience firmed to 389p on Lehman confidence.

Limelight, the bathroom and kitchen group, slumped 28.5p to 142.5p on worries about trading. Floated last year at 175p the shares have touched 200p.

Yorkshire Group, the old Yorkshire Chemicals, rose 22.5p to 211.5p following an encouraging trading statement. Stephen Wallis, who turned round Fisons, the drugs group, before its takeover by Rhone Poulenc Rorer, is revamping Yorkshire. Year's profits were down from pounds 10.6m to pounds 2.8m.