Pharmaceutical and oil sectors live in hope and fear

MARKET REPORT

Railtrack, oils and drugs dominated the stock market. The controversial share sale attracted much of the business; oils took a dip on worries of a UN/Iraqi deal and drugs awaited the crucial US presentation by British Biotech on its cancer treatment.

A massive 161.7 million partly-paid Railtrack shares were traded as small shareholders stampeded to cash in. But many of the more substantial - and by implication more professional private investors - were left in the cold with applications for more than 2,500 cut without a solitary share.

For them, talk of a financial killing had a hollow ring. After allowing for finance charges they are out of pocket.

Railtrack hit a 229p high, a 39p surge from the partly-paid issue price. The shares closed at 220.5p.

Oils were unsettled by renewed reports of a United Nations oil-for-food deal with Iraq. Some suggested the stock market reaction had been overdone.

Liz Butler at Panmure Gordon, the stockbroker, said: "What is really happening is the oil will be coming out of the front door when it was previously coming out of the back. The overall pool is still the same".

British Petroleum lost 5p to 569.5p; Shell 3p to 926.5p and Enterprise Oil 5p to 460p. Lasmo fell 6.5p to 176.5p.

British Biotech overcame any nerves ahead of its presentation, gaining 185p to 3,030p, a peak.

There is a widespread belief that the presentation on BB's Marimastat treatment will be encouraging with analyst briefings already arranged in London.

Chiroscience, another with a potential cancer drug, rose 42p to 520p and other bio shares made headway,

But Standford Rook, the TB group traded on AIM, had an eventful time following the Independent on Sunday's disclosure that director Wilson Carswell had refused to sign the share sale prospectus because he could not support claims over its TB treatment. The company affirmed its confidence in the drug and said "rapid progress" was being made. The shares ended 45p down at 488p.

Smith & Nephew continued to draw strength from its skin alliance with a US group, gaining 2p to 207.5p after touching 209p. Trading was again brisk. The shares have made remarkable headway since S&N revealed it had linked with a US business, Advanced Tissue Sciences, to develop artificially grown human skin.

The market experienced a lacklustre session with the FT-SE 100 index falling 11.4 points to 3,778.2. But the supporting FT-SE 250 index, returned to winning ways with an 8.9 gain to 4,522.3.

Hanson managed a 4p rally to 194.5p and BSkyB put on 9p to 449p on talk of a link with BT, up 5.5p to 345.5p. British Gas added 2p to 179.5p.

Allied Domecq, the struggling drinks group stripped of an 11.8p dividend, fell to 484p.

BAA, the airports group, was lowered 10p to 524p on worries it could face a late challenge over its pounds 130m bid for the duty-free division of Allders, down 12.5p to 213.5p.

Railtrack was not the only flotation to captivate the market. Luminar, a night club group surged from a 200p sale price to close at 255p (after 270p) and Hercules, an insurance and property services group hived off from Safeland, a property investment group, opened at 65p, easing to 60p. On Ofex, Motion Media, a video telephone business, closed at 95p against a 67.5p offer price.

The trend towards mergers among stockbrokers attracted attention to Raphael Zorn Hemsley, up 11p at 61p, and Neilson Cobbold, already in talks with financial services group Rathbone Brothers, 25p higher at 410p.

Appleyard, the garage group, was 1p firmer at 113p on bid speculation and Union, the old Union Discount, firmed 1p to 98p on talk of a French strike.

Joseph Lewis, the heavyweight Bahamas-based investor who has built a near-30 per cent interest in Christies International, is thought to have lifted his interest by 172,000 shares to 15.36 per cent.

Caldwell Investments, the textile group, gained 5p to 53p but Chamberlain Phipps, a shoe group, continued to suffer from last week's profits warning, falling 12p to 30p. It was floated at 165p nearly two years ago.

Prior, the property group where there had been hopes of a bid, fell 20p to 106p. Late on Friday it was disclosed that chairman James Prior and his family had sold a 26.8 per cent stake to a Swedish group, Fermenta, at 157.5p a share.