Perfect skin puts Smith & Nephew in high-tech glare

MARKET REPORT

Smith & Nephew, the health-care group which has enjoyed many spectacular takeover runs, could be about to assume a new role - biotech hotshot.

Its skin-growing link with a US group could move S&N to the cutting edge of health development, making its shares a much more realistic play than many of the over-hyped drug hopefuls where blue-sky considerations represent most of the share price.

S&N, long seen as an obvious target for the US health group Johnson & Johnson, gained 4.75p to 193.25p, a two-day uplift of 7.75p, a remarkable advance by a group which normally has to be content with fractional movements. It has linked with Advance Tissue Sciences of California, which has discovered how to grow skin from human cells held in "tissue banks". The process should be on the market next year.

However, the S&N link has not impressed all followers. Some believe it, like the drugs giant Glaxo Wellcome, needs a significant acquisition to keep its products momentum rolling.

The rest of the stock market had an uneventful session, even though the FT-SE 100 index made headway and volume topped 1.1 billion shares.

Footsie rose 8.7 points to 3,817.9, shrugging off worries about tomorrow's elections. Indeed, the market takes the view that yet another Tory rout could increase pressure for lurking predators to get their bids done and dusted before Labour (new or old) arrives in the corridors of power.

Blue chips for once outpaced supporting shares, with the FT-SE 250 index falling for the second day running.

Turnover was inflated by Hanson's possible sale of 12.5 per cent of National Grid and a legacy from the Rentokil/BET confrontation. Grid turnover ballooned to 236.6 million shares; Rentokil to 90.06 million. The Grid price rose 6p to 205p and Hanson was just a shade firmer at 197p.

SmithKline Beecham, briefing analysts in Belgium and expected soon to get approval for a heart treatment from the US Food & Drug Administration, moved ahead 8.5p to 704.5p. FDA approval of Glaxo's Ultiva anaesthetic lifted the shares 13.5p to 806p. British Biotech, with meetings later this month on its cancer treatment, stretched to new highs, up 50p at 2,925p.

TI Group, meeting fund managers under the Kleinwort Benson umbrella, responded with a 10p gain to 547p.MAID climbed 26p to 240p (after 264p) on its IBM deal. Ladbroke declined 7.5p to 195.5p as the possibility was accepted that any hotel deal may not lead to a bid and Body Shop International held at 161p after notifying the Stock Exchange that its figures would be released tomorrow.

British Airways continued to fret about the possibility of a rights issue, falling 8p to 519p. National Power ignored Southern's request for a list of shareholders, losing 10p to 561p.

Argos, the stores group, was the best-performing blue chip, gaining 21p to 469p, with the market allegedly short of stock. Moss Bros, the clothing retailer long seen as a possible bidder for Austin Reed, rose 28p to 938p. An upbeat retail sales survey helped.

Trocadero, confirming its Enid Blyton deal, held at 72p and Pan Andean Resources, seeking oil in Bolivia, surged 11p to 81p ahead of tomorrow's expected assessment from its dominant partner, the Australian BHP giant.

More arrivals on AIM. Waterfall, a leisure group placed at 45p, reached 56p. The company, 25 per cent owned by First Leisure Corporation, has 20 snooker clubs and runs three nightclubs. FNR, with forestry interests in the former Soviet Union, touched 39p from a 35p placing.

Exco, the money broker, rose 3p to 103p, reflecting director buying, but Perpetual's heady run came to an end with a 30p fall to 2,443p.

Battered Cray Electronics recovered 5p to 48p following a positive trading statement and Knox D'Arcy, the investment trust born out of the remains of Ingham, once a car parts and worsted business, returned at 36p, just above the suspension price.

Knox D'Arcy is a firm of management consultants with an impressive record of company turnarounds. It intends to use its quoted vehicle as an investment trust specialising in hard-pressed groups.

David Whelan, the former footballer who runs JJB Sports, is the latest to cash in on sporting shares. He and his wife, Patricia, netted around pounds 2.8m from the sale of 394,000 shares at 715p. Last week the sports shops chain produced profits up 70 per cent to pounds 12.9m. The shares shaded 3p to 708p.

TAKING STOCK

rStockbroker Neilson Cobbold, based at Liverpool, attracted attention. The shares, which arrived on AIM at 145p in October, rose 40p, hitting a 270p peak. The group, which has an investment management operation, reported profits of pounds 884,000 for last year. With a pounds 7.2m market valuation it could be a target as the financial industry is reshaped.

rQueens Moat Houses, the hotel group, continues to gather Continental support. A mystery Swiss investor who has been playing in the shares has picked up 3.5 million, lifting his interest to 13.8 per cent. The general view is that the Swiss involvement is passive, with the shareholder banking on QMH's recovery. Yet some wonder whether the stake will be a platform for one of the predators, said to be circling.

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