Second-liners steal the limelight from blue chips

MARKET REPORT
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The stock market has become a place for second-liners. While blue chips start and stutter, supporting shares, as represented by the FT-SE 250 index, romp ahead.

This year it has hit new peaks with monotonous regularity, upstaging the blue-chip FT-SE 100 index which has drifted since stretching to a high two months ago.

The success of the supporting cast indicates the underlying resilience of the stock market and the quality of results produced in the current profits season.

Second-liners are not so slavishly at the mercy of knee-jerk reactions to political and economic influences and the goings on in New York.

The appeal of 250 shares to fund managers was demonstrated by the performance of JD Wetherspoon, the pubs group. Its elevation to the 250 club lifted the shares 45p to 929p where they sell at approaching 40 times last year's earnings.

Worries about tomorrow's non-farm payroll figures in the US helped rein back blue chips. At one time Footsie was up 7.8 points; it ended 3.4 lower at 3,725.1.

Last time, the payroll numbers sent New York tumbling, pulling London lower. With the figures, surprisingly, emerging on Good Friday, London will not be able to react until Tuesday. The prospect of such a long wait is testing sentiment.

But, at least for the time being, such influences waft over supporting shares and the 250 index rose 11.2 to 4,359.9. At the start of February it was 4,125p.

Thorn EMI remained the most discussed share in the market with the price sinking 38p to 1,805p as the expected bid failed to materialise. But the relative strength of the shares - still more than 100p above Monday's close - indicates the deep belief a deal is on the horizon.

The group's failure to make any comment is surprising; the Stock Exchange should have insisted on a statement after such an upsurge.

The market has a host of names in the Thorn frame and a deal before the August demerger is still likely. The link between Bertelsmann and CLT to create Europe's biggest broadcaster heightened the excitement.

Attention was directed at Pearson with break-up stories resurfacing; in busy trading the shares rose 23p to 701p. Reed International put on 18p to 1,144p; Reuters 11.5p to 733.5p and United News & Media, on figures, a further 21p to 666p.

As the merger talks dragged on BT slipped 4p to 371.5p and Cable & Wireless edged forward 2p to 531p. A deal could push BT to 400p and Cable to 600p but if the talks are called off BT could retrace to 340p and Cable to 440p.

Signs the forecourt petrol war could be drawing to a close helped most of the participants. With the crude price continuing to gather strength it could be argued they had little choice but lift prices.

Hard-pressed independent Frost recovered 19p to 143p and Tesco, ahead of an expected marketing initiative, improved 7.5p to 274p. Shell rose 10p to 857p.

Bass edged ahead 5p to 767p on a not entirely surprising story that it planned to buy full control of struggling brewer Carlsberg Tetley.

Allied Domecq, with 50 per cent of CT, rose 3p to 500p.

Vodafone improved 2.5p to 258p with NatWest Securities signalling a 318p target price and Schroders 300p.

Argos, the retailer, tumbled 57p to 623p, largely on the back of its special dividend.

Imperial Chemical Industries, as talk of profit downgrades swirled, fell 16p to 894p while Eurotunnel found another new low with a decline 1p at 63p.

Sage, the software group, climbed 27p to 395p, a peak. It is thought to be trading well with its French acquisitions making significant contributions. Profits could reach pounds 30m against pounds 22.4m.

A bullish circular, possibly by NatWest, is being prepared, suggesting the shares are a buy up to 450p.

Royal Bank of Scotland retreated 7p to 494p. It paid pounds 45m to lift its stake in Banco Santander to 4.29 per cent; the Spanish bank has 9.9 per cent of Royal Bank.

Unitech gained 27p to 703p as the signalled Siebe offer appeared. Siebe declined by 23p to 874p.

Dicom, an image processing group, made the expected strong AIM debut, touching 325p and closing at 310p. Hurlingham Properties, more subdued, traded at 80p.

Aegis, the media buyer, improved 2.25p to 50p as US group Omnicom placed 75 million shares through Cazenove and ABN Amro Hoare Govett at 45.25p.

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