Prices start moving to narrow the Wall Street gap

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The Independent Online
American influences persuaded shares to overcome early lethargy and stretch to their highest for 15 months months.

Once again New York was in record-breaking mood and there were signs some big US investors had started to look more closely at the relative underperformance by the London stock market.

Some observers remain perplexed by the yawning gap between London and New York. As the Dow Jones Average has romped ahead the FT-SE 100 index has made much more subdued headway.

Against a 700 point DJA gain this year, the FT-SE has advanced 300. Yet the UK interest rate outlook is much less depressing than it was only a few months ago, corporate results have been better than expected and most agree the economy is continuing to recover.

The hope US investors may take the view New York is defying gravity and shares in London are looking neglected and comparatively cheap was the principle reason behind yesterday's 15.2 points Footsie gain to 3,381.3.

Any significant American buying could push London shares to a new peak. Footsie and the DJA both hit highs at near the same time in the early months of last year. This year the Dow has powered ahead, reaching highs with almost monotonous regularity in recent weeks. But Footsie, although edging forward, is still 129 below its record level.

Takeover speculation also contributed to yesterday's market's strength.

Zeneca edged forward a further 6p to 1,099p and another flow of stories that Fisons had at last agreed terms with Medeva - a three-for-two share exchange - kept one of the market's longest running bid stories on the boil.

Medeva gained 3p to 252p and Fisons dipped 2p to 192p. Yorkshire-Tyne Tees, the television group, remained caught up in bid speculation, gaining a further 21p to 549p as the market continue to puzzle about Friday's dealing activity.

Thorn EMI added 4p to 1,352p with a NatWest Securities presentation helping to keep the forward momentum.

Argo Wiggins Appleton, the packaging and paper group thought to have an unsettled major shareholder, gained 7p to 256p in brisk trading.

Among financials Mercury Asset Management gained 9p to 847p and Smith New Court 6p to 445p.

But Cable and Wireless fell 7p to 441p as some speculators lost patience and Legal & General, Friday's hot tip, relapsed 5p to 530p.

Rumours that Hanson, little changed at 227.5p, had at last decided on its next target helped keep the bid rumour mill grinding. Trading in Hanson shares was often brisk although most of the deals were small.

Prudential Corporation, overshadowed by the excitement which has swirled around L&G, fell 1p to 347p. Talk of a Pru sell recommendation appeared to be misinformed.

Two big dividend payments, Severn Trent (25.8p) and National Power (13.88p) hit their shares and clipped 2.4 points from the FT-SE 100 index.

British Petroleum jumped 6p to 460p. Buy suggestions have been flowing and it is one of the shares on any New York shopping list. A four million trade late on Friday at 459p by UBS created much of the interest.

Supermarkets were ruffled by what appears to be another cut price skirmish. Argyll, the Safeway chain, dipped 4p to 320p and Tesco 4p to 284p.

Wembley, the stadium company, was responsible for more than a sixth of the day's turnover, with the shares sticking at 2.5p.

Most of the activity stemmed from sales by the banks which took part in Wembley's reconstruction. Because of market demand they were given permission to sell 64 million shares through Smith New Court.

Sleepy Kids, the cartoon and merchandising group, was back in the spotlight. The shares rose 5p to 52p as the group said it was negotiating with a leading US broadcasting group over Budgie, The Little Helicopter, the creation of the Duchess of York. Fox, part of the Rupert Murdoch empire, is thought to be the US group involved.

The day's biggest gain was scored by Oxford Molecular, up 16p to 76p. It has signed with Glaxo Wellcome to provide the software to speed the drug giant's drug discovery programme.

Johnson & Firth Brown, the engineer, was firm at 50p. Interim profits of pounds 2.2m prompted year's forecasts to be lifted from pounds 3.6m to pounds 5m.

Enviromed, the healthcare group, gained 6p to 55p, after Friday's slump. There is talk of a bid near the 110p flotation price but losses of nearly pounds 5m must cast doubt on such generous terms.

Carclo Engineering rose 7p to 289p as Ian Williamson, formerly with BBA, became chief executive.


o Unigroup should return today after the reverse take over of the Abbott Group for pounds 31.6m in shares. Abbott embraces KCA Drilling, once a quoted company in its own right. It is a drilling contractor for the oil and gas industry, mainly in the North Sea. Unigroup, a building materials group, was suspended last month at 46p.

o Datrontech, a computer memory supplier, jumped 17p to a 202p peak with about a score of deals recorded. It came to market in March at 130p. Directors have more than 70 per cent of the shares. Their recent strength is thought to be due to the imminent arrival Windows 95, the new operating system from Microsoft, which is expected to need more memory.