Shares romp ahead in the grip of summer madness

Shares stretched to a record high as the stock market continued what some of the cynics describe as "summer madness".

Although trading was far from enthusiastic - many big hitters are still on holiday - and a technical situation arose in the futures market, there is no doubt shares have taken on a new air of confidence in the past two weeks.

Interest rate cuts are still in the air and the feel-good factor is seeping through to the consumer. The PSBR figures underlined the possibility of Budget tax cuts and the profit and dividend record remains strong. To pile on the pleasure New York has not, as so many predicted, toppled; it remains confidently overvalued. A low level of housing starts provided the latest encouragement.

It was in such an atmosphere that the FT-SE 100 index romped ahead 35.5 points to 3,872.9, easily topping the previous peak of 3,857.1, achieved five months ago.

Blue chips have been in exhilarating form for much of this month, scoring 10 gains and only two reverses. The supporting 250 index has been firm although it remains more than 200 points from its peak. It rose 10.4 to 4,366.4. Where to now? Some hopefuls expect Footsie to reach 4,000 by the end of the month; others have set their sights on 4,000 for the year- end. But after the latest run even the more cheerful 1996 estimates may have to be lifted.

The market could, however, struggle on Monday when it seems a large batch of shares are due to go ex-dividend.

For Thorn EMI - to be split into Thorn, a rental group, and EMI, a highly rated showbiz operation on Monday - it was a triumphant Footsie farewell. With the demerger, to the surprise of no one, approved by shareholders, the shares soared 44p to 1,833p, just below their high. The Thorn arm is expected to start trading at around 410p with EMI, seen as a takeover target, nudging 1,400p. NatWest Securities believe any bid price will be around pounds 20.

The arrival of twin thorns means that Cookson, the conglomerate, is dumped in the investment wilderness outside Footsie. After attempting to rally the shares fell back 2.5p to 248p, lowest for more than a year.

Railtrack was the best performing blue chip, gaining 9p to 248p on talk it had underperformed since it came to market in May and remains an appealing income stock.But some could not refrain from wondering whether corporate action loomed. After the takeover of Porterbrook, the rolling stock leasing company, by Stagecoach for a seemingly generous pounds 825m the once mundane railway industry could be ripe for a series of bids.

BSkyB, expected to produce a 56 per cent profit increase to pounds 256m on Tuesday, climbed 18p to 533p as Barclays de Zoete Wedd made encouraging noises.

Banks remained strong with Lloyds TSB, up 9.5p to 369p, taking up the running. Among merchant bankers Hambros, a long time takeover shot, rose 6p to 242p.

On the oil pitch British Petroleum climbed to yet another peak, 629p, with an 11p gain. Shell, enjoying SBC Warburg support, added 8p to 940p. Frost, the independent petrol retailer, pumped up an 8p gain to 113p on the lowering of the temperature in the petrol price war. It has risen 23p in two days.

Hanson suffered the humiliation of falling 3.5p to 163p after its lacklustre profit performance on Thursday and the lack of upbeat information about the four way demerger. UBS put the break up value at 160p to 164p. Earlier this year some analysts were talking about 240p. BTR lost 2.5p to 255.5p.

British Aerospace rose 11p to 964p on the Matra missiles venture. Elsewhere British Steel hardened 3p to 186.5p following Societe Generale Strauss Turnbull buy advice.

Bass, expected to at last clinch the takeover of the Carlsberg-Tetley brewing group next week was a shade easier but Allied Domecq, owner of half of CT, rose 6p to 449p.

RTZ continued to firm on the improving copper price, up 10p at 969p, and Bakyrchik lost 33p to 293p following the loss of a Kazakstan gold licence by a consortium in which it is involved.

Colleagues, a recruitment group, produced its second profit warning within two weeks and fell another 26p to 119p. Birkdale, confirming its cash call, edged forward to 7p. The marketing group is raising pounds 2.5m.

Allied Leisure gained 4.5p to 43.5p; it has completed the acquisition of the last of 19 Granada bowling businesses.