Speculators bet on Zeneca - come hell or high water

MARKET REPORT

It is either the ramp of the year - or someone, somewhere has privileged information about the Zeneca drugs group.

Not for the first time the shares zoomed ahead in busy trading. They touched 1,588.5p, a peak, closing at 1,587p, a 43p gain.

The relentless progress - the shares were 1,085p in October - has been spurred by takeover hopes. The story going the rounds yesterday was that an pounds 8bn facility was being prepared in the money markets for either Glaxo Wellcome or Roche, the Swiss group, to put towards a takeover war chest.

At its present market price Zeneca, spun off from Imperial Chemical Industries, is worth around pounds 15bn.

According to market gossip an offer of around 1,800p a share, in line with some estimates of the group's basic worth, is likely to materialise in the next few days.

But the whole exercise could be self-feeding. Many fund mangers were caught on the hop by Glaxo's bid for Wellcome. They are not going to make the same mistake twice; most are prepared to hang on to their Zeneca shares, come hell or high water, just in case that so far elusive offer should appear.

With such a reluctance to sell and market-makers desperately seeking to keep their books square, it does not take much to inject exuberance into the drug group's shares.

It could, however, be significant that the shares have been pumped higher since Roche, dripping with cash, produced results and let it be known that it was seeking acquisitions.

Zeneca is the sort of strike it needs to recapture the prime position it enjoyed before its great Swiss rivals, Sandoz and Ciba-Geigy, merged.

Talk of more bullish analysts' comments - Barclays de Zoete Wedd was said to be about to put pen to paper - also helped the Zeneca price.

Glaxo Wellcome, thought to be unlikely to attempt a Zeneca strike, gained 24p to 939p with UBS said to be avid buyers.

The two drug groups contributed more than six of the 14.5 points the FT-SE 100 index gained to 3,887.2.

Retailers were encouraged by an upbeat Confederation of British Industry survey and superstores overcame some of Wednesday's unease following Tesco's attempt to resurrect a price cutting battle.

Railtrack chugged along cheerfully reaching a 259.5p peak, up 9.5p.

The group's property potential is the latest influence to drive the price. The much derided share continues to enjoy an attractive dividend yield and there remains a sneaking suspicion it could enjoy corporate activity.

Eurotunnel, however, was back in the sidings, off 2.5p to 98.5p.

Lasmo flared 6.5p to 202.5p, Director Richard Smernoff picked up shares which would seem to destroy the market theory that the oil group is preparing to pounce on Tullow Oil, up another 3p to 117.75p.

BPB, the plasterboard group, put on 4p to 367p as analysts visited its new Berlin plant.

Lucas Industries, about to enjoy a more powerful index weighting as LucasVariety, was busily traded; the shares fell 5p to 231p. It is likely to go into Footsie later this month.

National Power, as Kleinwort Benson moved to a sell stance, fell 7.5p to 386.5p. The partly-paid, ahead of next week's final instalment, lost 7p to 250p.

Bass fretted about the Carlsberg Tetley takeover and rumours of problems on its betting side. The shares fell 14p to 801p. Allied Domecq continued its progress following its proposed CT sale, gaining 3p to 471.5p.

Rolls-Royce's Farnborough contracts again powered the shares, up 5p to 235p. British Aerospace, on Airbus orders, rose 16p to 1,015.5p.

Lonrho's decision to look at offers for its hotels chain pushed the shares 1p higher to 177p. Granada, enjoying further evidence of the demand for hotels as it seeks to sell many of its Forte properties, rose 8p to 864.5p.

Melrose Energy, raising cash for its signalled Siberian oil venture, put on 3p to 53.5p and Caird, the waste disposal group, responded to a return to profits with an 87.5p gain to 562.5p.

MAID, the on-line information group, added 18p to 328p and BGT managed a 90p rise to 1,810p following applications for approval for a blood-clotting factor.

Leeds, a textile group not the football club, was the day's worst performer. The shares crashed 61.5p to 137.5p following a profit warning. Caspian, owners of Leeds Utd, rose 1p to 28p on the club's Premiership win.

TAKING STOCK

A sudden display of life at Fenchurch, the insurance broker, has awakened takeover hopes. The shares rose 4.5p to 97p, the second day running a share which has been going steadily downhill has attracted buyers. US insurance groups are said to be prowling around Fenchurch, which produced disappointing interim profits, prompting year's estimates to be reduced to pounds 6.5m. Last year it achieved pounds 8.4m.

Greenhills, the restaurant group, held at 9.5p. In a reverse takeover it is acquiring Browns Group which has a club in London's Covent Garden and takes in a stretched limousine hire operation. It is also thought to have pub interests. The deal will be funded by shares, probably priced at 10p, and two Browns directors will take over the running of the enlarged group.

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