Old British Gas rewards loyal Sids by showing its flair

The faithful Sids who stuck with their British Gas investment are not doing too badly - despite the cries of woe when Centrica was shed earlier this year.

It was, in the eyes of some, the demerger from hell with BG, the rump of British Gas, and Centrica seen as offering shareholders a deadly dull and not particularly profitable future.

BG was weighed down by a series of problems with a Monopolies & Mergers Commission investigation its biggest worry. Centrica's future seemed to hinge on a takeover bid materialising.

Yet the shares of both arms have performed well with BG on occasions flaring into action. The two topped the blue chip leader board yesterday with Centrica up 4p to 76.25p and BG 9.5p better to 231p. They have a joint value of 307.25p; ahead of the split British Gas was priced around 230p. Since it was floated in 1986 British Gas's best level was 360p, hit just before Christmas 1993.

The strength of BG since the break-up stems in part from the favourable way the stock market interpreted the outcome of the MMC investigation; Centrica's recent performance has much to do with investment meetings which have left analysts much more positive about its prospects and the unwinding of the North Sea take-and-pay contracts.

BT was another privatisation share in form, dialling a 9p gain to 454p. Approaching dividend payments prompted the interest. As part of its merger with MCI, the US group, BT promised to pay a special 35p dividend in September. At the same time it will distribute its 11.95p final dividend.

The stock market continued to put the six-day reverse behind it with Footsie gaining 43.7 to 4,640. New York's overnight revival helped; so did a firm gilts display following a well-received pounds 2bn auction.

Banks had another volatile session with Barclays up 44p to 1,214.5p. Abbey National jumped 26p to 828p and Bank of Scotland 14p to 399p. Royal Bank of Scotland tumbled 22.5p to 575.5p as HSBC distanced itself from bid stories and Peter Woods, founder of the Direct Line insurance group, departed. Cater Allen, awaiting the Abbey strike, rose 22.5p to 580p.

The Standard Chartered banking group hardened 6p to 918.5p on suggestions Tan Sri Khoo Teck Puat, one of the so-called "white squires" who helped save the company from a Lloyds takeover assault 11 years ago, had nudged his shareholding above 15 per cent.

Drug shares were helped by US interest with Merrill Lynch advocating the merits of SmithKline Beecham. Glaxo Wellcome gained 25p to 1,277.5p; Zeneca 42p to 1,936p and SmithKline 27.5p to 1,076p.

Unilever was another higher on US associations. The shares rose 24.5p to 1,721.5p on talk it was planning a big strike with the famed Kellogg breakfast cereal group said to be the target.

Granada, off 10.5p to 844p, duly delivered the Yorkshire-Tyne Tees Television bid. Its terms, however, failed to win universal support with some complaining they were too low. Yorkshire shares edged ahead 2.5p to 1,157.5p.

Bus shares moved forward on the Government's latest initiative - encouraging the use of buses. FirstBus led the convoy, up 11.5p to 212.5p.

Rolls-Royce flew 5.5p higher to 243.5p. After the market closed the aero engine group disclosed foreign shareholdings had broken through the 29.5 per cent ceiling. Overseas investors now account for 30.22 per cent of the capital, some 10.6 million above the Government-imposed limit.

The group wants the excess shareholdings removed by 16 July. If they are not it will sell the offending shares at "the best price reasonably obtainable".

Rolls and British Aerospace, the other victim of the Westminster rule, are seeking to have the restriction abolished.

T&N tumbled 16.5p to 143p as its hopes of a US asbestos litigation cap disappeared following the US Supreme Court rejection of a pounds 1.3bn proposed settlement. The continuing presence of the asbestos cloud reduces the chance of a takeover strike, a possibility that lifted T&N shares recently.

Dixons slipped 2.5p to 491p on The Independent report that Tesco, up 3p at 371p, planned a push to break into television and video selling.

SGB, the scaffolding group, closed at 156p from a 150p placing.

Wescol, an engineer, was little changed at 54p as Charterhouse Tilney placed 14.3 million shares with nine institutions. The company is taking over engineer Glosford for pounds 6.38m.