Shadow of 1987 hangs over blue chips' continued climb

MARKET REPORT

Blue chips managed to achieve another peak, even though many in the stock market pondered the happenings of nine years ago when equities suffered their most traumatic slump.

There had been fears that echoes of the 1987 crash would worry investors, prompting the market to lose its autumnal glow. Although failing to hold best levels, Footsie ended 11 points higher at 4,053.1, a mere 2.3 above the previous record, hit on Tuesday.

Supporting shares have, however, failed to enjoy the fun which has pushed Footsie to 10 autumn peaks. The MidCap index, with 250 constituents, is still more than 100 points from its high, despite a 6-point gain to 4,450.1. Its best level is 4,568.5.

Government stocks were unsettled by Treasury adviser Tim Congdon's call for a 1 percentage point interest rate increase.

A little takeover action helped lift shares. UniChem's resumption of hostilities over Lloyds Chemists and a merger in the once arcane world of discount houses helped sentiment. Lloyds quickly rose above the UniChem offer, gaining 17p to 521.5p on expectations Gehe, the German group, will mount a counter strike.

Gerrard & National, with a pounds 53.7m offer for King & Shaxson, fell 27p to 272p, with an interim profits slump doing much of the damage. K&S gained 20p to 182.5p. The deal signals a stockbroking get together; K&S owns Greig Middleton and G&N embraces Gerrard Vivian Gray. The two stockbrokers will merge, forming what is claimed to be the leading private client broking house.

Boots, off 5.5p at 638p, was unsettled by the proposed ending of resale price maintenance on over-the-counter medicines. But Asda, the supermarket chain which has campaigned for price fixing to be abandoned, added 1p to 114.5p. Safeway gained 6.5p to 362.5p and Tesco 5p to 332.5p.

Pearson rebounded 20p to 696.5p on second thoughts about its boardroom changes and British Aerospace enjoyed an SBS Warburg lift, climbing 23.5p to 1,163.5p.

Brewers continued to draw strength from the Accounting Standards Board's proposals over property depreciation. Bass ended 4.5p higher at 799.5p and Whitbread, which is rumoured to be the front runner for the unquoted BrightReasons restaurants chain, 8p to 726p. BrightReasons, put up for sale by its venture capitalist backers, could cost around pounds 80m.

Eurotherm, the electronic equipment group hit in the summer by an unseemly boardroom upheaval, brightened 28p to 600p as ABN Amro Hoare Govett said the shares were a buy but Johnson Matthey, the metals group, fell 11.5p to 611p with UBS cutting its profit forecasts by pounds 9m to pounds 110m and pounds 12m to pounds 124m.

TI Group shaded to 561.5p as its pounds 189m bid for the Swedish polymer engineer, Forsheda, ran into flak from the Henderson fund management group which has 13 per cent. Fund manager Stephen Peak demanded an improved offer but TI, with 63.6 per cent of Forsheda under its corporate belt, said the offer was "full and fair".

Barclays, the banking group, continued to benefit from this week's investment meeting, gaining 10.5p to 996.5p. National Westminster bank added 13.5p to 709p on Credit Lyonnais Laing support.

Cortecs International, the biotech group which has fallen from 418p since the spring, declined a further 5p to 200p. The company said it was not aware of any factors which could account for recent weakness.

British Energy, the privatised nuclear power group, attracted renewed attention on its restructuring plans and dividend yield considerations. Like Railtrack, it is making impressive headway after an indifferent debut. The partly paid shares gained 3.5p to a 125.5p peak. They were sold at 100p, promptly falling to 91p.

Worries about the next set of profits from Pilkington, the glass group, again haunted the shares, off 3.5p to 174p.

Verity, with its Far Eastern shareholder Wo Kee Hong continuing to sell, gained a further 1.5p to 34p. It is widely believed that Wo Kee Hong, which once had a significant stake, has virtually completed its sale programme.

HTV, the television group, attracted attention ahead of the signalled industry restructuring, gaining 8.5p to 386.5p. BSkyB moved remorselessly towards the 700p barrier, improving 17.5p to 691p. Merrill Lynch support remained the spur for VideoLogic, up 1.5p to 62.5p, a 13p gain this week.

Tottenham Hotspur scored a 27.5p gain to a 520p peak and Conrad, said to be near to completing a deal with one of the unquoted Premiership clubs, put on 0.5p to 6.75p.

TAKING STOCK

rA sudden fizz in the shares of JN Nichols, the soft drink group best known for its Vimto brand, has prompted talk of possible takeover action with one of the big brewers, presumably Bass, regarded as the most likely predator. The shares had been quiet with recent profit growth unexciting. But they jumped 12p to 224.5; there were suggestions of unsatisfied buying orders. Profits last year were pounds 9.6m with forecasts for this year hovering around pounds 10.2m.

rThe restructuring at Castle Mill International, the hard pressed textile group, has gone well and there is talk of demand for shares exceeding supply. One buyer is apparently seeking a 10 per cent stake. CMI, an ideal shell, has said it will make acquisitions. The shares held at 3.5p.

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