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Planet Hollywood shares rocket towards the stars

Planet Hollywood, the trendy restaurant chain, saw its shares rocket by as much as 78 per cent in their first day of trading on Wall Street as investors put their money on a heady mixture of growth prospects and Tinseltown cachet.

"Eatertainment", the concept accorded to the combination of eating and entertainment, was seized on by some analysts as a good bet. "It has the brand name, it has the Hollywood cachet and it has great growth. The stock is hot," said Stefan Cobb, fund manager at Sirach Capital Management in Seattle.

Together with CompuServe, another starter stock, Planet Hollywood reflected continuing robustness in the market, underpinned by a strong bond climate, as big stock movers reacted to the good earnings news that continues to pour out of corporate America.

Apart from Planet Hollywood, the biggest single group driving the market was high tech shares, powered by better-than-expected earnings from Microsoft Corp, which restored confidence in computer-related companies' ability to keep earnings growing after sentiment had been knocked previously by an earnings growth slowdown warning from IBM.

Microsoft rose as much as $4 to $113 after reporting third-quarter net earnings of of $562m or 88 cents a share, up 42 per cent from the same quarter a year ago. "The Microsoft earnings were very, very good, and as a result the techs are providing some leadership," said Hugh Johnson, chief investment officer at First Albany Corp.

The Nasdaq Composite Index, a barometer of the high technology sector, was up five points at 1141 in mid-day trading. "It is all earnings today. There is a slight macro story given the strong bond market and the dollar, but the big movers are reacting to earnings," said Phil Roth, chief technical analyst at Dean Whitter.

CompuServe, the on-line service company, benefitted from the favourable high tech climate as, after a two hour launch delay, its shares rose as much as 18 per cent in their first day of trading. CompuServe sold 16 million shares at $30 to raise $480m.

"It is cheap relative to America Online and that makes it attractive, but this is the kind of stock that could really implode. The internet is advancing in such a way we cannot see the proprietary advantage of these services," said Neil Hokanson, fund manager at Hokanson Financial Management.