Takeover speculation keeps the atmosphere electric

MARKET REPORT

Takeover action, real and rumoured, sent yet another surge of excitement through electricity shares. National Power's pounds 2.5bn offer for Southern Electric was the only deal to materialise but it was enough to spark speculation that others will soon appear.

London Electricity and Midlands Electricity were singled out for special attention. If the rumour mill was on form a 920p-a-share offer should arrive for London today at its Holborn office from Houston, the US group. The identity of Midlands' alleged bidder was more elusive but a host of American and Continental names were bandied around. London gained 38p to 855p; Midland 24p to 417p.

NP's agreed offer for Southern, which still needs Whitehall clearance, sent the distributor's shares racing ahead 32p to 891p. It also lifted NP 13p to 605p, reflecting the stock market's conviction that the American Southern Co's predatory ambitions would not thwarted by the takeover bid for the UK group. The Scottish power groups, Scottish Hydro-Electric, up 12.5p to 367.5p, and Scottish Power, 13.5p higher at 400.5p, were drawn into the excitement and Yorkshire Electricity, for so long the sector's favourite bid candidate, rose 13p to 874p.

The electrical excitement spilled over to waters with Thames, another potential bidder for London, up 8p to 584p and Anglian 10p to 614p. United Utilities, combining the North West's electricity and water companies, gained 14p to 627p. After a shaky start its shares have been firm and there is a growing conviction among utility watchers that electricity- water combinations could be a strong defence against overseas marauders. UU, it is thought, plans to buy into the US gas industry. Cambridge Water, a second-liner which last month was still a statutory company, had another lively session, up 38p to 315p; the non-voting shares rose 33p to 290p.

If it had not been for the utilities the market would have died of boredom. Trading was mainly featureless with the FT-SE 100 index briefly touching a new high but closing 4.4 points down at 3,852.7. Its performance tended to offer support to the argument that London is decoupling from New York where the Dow Jones Average was up more than 50 points in early trading.

Although Footsie faltered the supporting index continued its relentless march, climbing 9.6 to a 4,544.1 peak.

Among blue chips higher was Marks & Spencer, up 3.5p to 460.5p. A modest Merrill Lynch profit upgrading, pounds 25m to pounds 1,145m for this year, created the interest.

Cadbury Schweppes, 9p firmer at 527p, again attracted bid speculation. One food bid did materialise, a 110p-a-share offer for Everest Foods from Canadian chip maker, McCain. Everest jumped 30p to 109p.

Imperial Chemical Industries edged ahead 5p to 928p despite some unease about Thursday's first-quarter figures. Forecasts are in the pounds 200m to pounds 215m range against pounds 221m last time. Year's estimates are being cut by around pounds 20m to pounds 1,205m.

Comments on accounting policies lowered Carlton Communications, 11.5p to 458p, and Glaxo Wellcome, 9p to 801p. Increased losses left Eurotunnel 4.5p down at 69p.

Lasmo, the oil group, achieved the distinction of becoming the first to enjoy a higher turnover on Tradepoint than on Seaq. The order-driven Tradepoint deals were recorded as 2.5 million while Seaq accounted for 2.1 million. The price, however, was unchanged at 189.5p.

Builders produced a few gains with talk that corporate action lurks in the sector. Costain, where Arab interests have built substantial stakes, added 4p to 101p; Redrow 5p to 150p and Tay Homes 5p to 144p.

Wainhomes gained 2p to 101p. In January, when Wainhomes' shares were depressed as police investigated alleged accounting problems, the rival Bellway housebuilding group, picked up nearly 5 per cent.

In an intriguing deal Wainhomes has purchase for pounds 24.45m, payable over 10 years, 21 building sites from English China Clays. Developments have already started on some of the sites and others have planning permission. The deal, which expands Wainhomes' territorial spread, puts a value of around pounds 12,000 on a housing plot against an industry average nearer pounds 16,000.

Micro Focus dived 192p to 1,143p as the rumoured bid failed to materialise and Filtronic, making parts for mobile telephones, jumped 38p to 433p on Panmure Gordon support. Manganese Bronze, the London taxi cab maker, moved ahead 10p to 307p.

TAKING STOCK

Middlesex, the metals group with interests in the former Soviet Union, was the day's most busily traded share. Figures are due soon and it is widely believed the group will announce its move from the doomed USM to the full market. There is also talk of further expansion moves. The shares held at 8.25p.

Cafe Inns, running pubs in the North West, jumped 15p to a 170p peak. It is benefiting from its swing from tenanted to managed pubs. The company now has 14 managed houses and 70 run by tenants. Cafe Inns hopes to raise pounds 2m to help increase its managed estate. It has untangled a joint venture with the Burtonwood Brewery, collecting two managed pubs and pounds 1.4m in the process. In January its shares were below 100p.