Telecom stocks put Footsie back on an even keel

Market Report

AFTER FOUR days under the Brazilian whip, the stock market struggled back to winning ways.

Footsie started the week at 6,147.2 points after touching a trading high on Friday. It then slumped 327 points as the Brazilian currency crisis roasted shares. But the road to Rio took a new twist yesterday as the Brazilian authorities decided to float the real and New York sighed with relief.

The blue-chip index surged 120.8 points to 5,941. At one time, in what was another busy and volatile session with share turnover topping 1.1bn, it was nursing an 83.4 decline.

The surprisingly confident end to the week did not extend to the under- card. It came too late for the mid and small-cap shares to play catch up. The mid -cap index ended with a 15.7 point fall at 4,857.1 and the small cap fell 7.6 to 2,100.1.

Telecoms helped the charge. Telewest Communications, the cable group, dialled a new high after targets were lifted. Warburg Dillon Read increased its price expectation to 260p and, not be outdone, Dresdner Kleinwort Benson moved to 290p. The shares rose 22.5p to 240.5p.

Cable & Wireless, driven by takeover rumours last week, put on 46p to 874p with Henderson Crosthwaite producing a 1,080p target, and Colt Telecom, last year's star market performer, rose 40p to 1,070p.

Vodafone firmed 17p to 1,068.5p, encouraged by the signing up of its 5 millionth customer and unruffled by talk that it may have to increase its bid for the US Airtouch Communications, which is thought to be around $55bn. It seems certain that Vodafone will face competition, with Bell Atlantic the most likely rival for the US mobile phone group.

Great Universal Stores, up 77p at 684p, continued to draw strength from its upbeat trading statement with CSFB and Warburg making positive noises. Even Marks & Spencer staged a modest recovery after Thursday's torturous performance, gaining 11.25p to 351.75p.

P&O, the shipping group, rose 9.5p to 617.5p as Merrill Lynch became more upbeat but lowered its profit expectations. Credit Lyonnais said the shares were oversold.

WH Smith, taking over Helicon in a pounds 6.5m cash deal, climbed to yet another peak, up 36.5p to 627.5p. The seemingly staid old group is now regarded as an Internet play and there is talk of US buying. Helicon, a print and electronic publisher, is seen as further evidence of Smith's Internet commitment. It jumped 36.5p to 100p.

The market's other Internet star, Dixons, was at one time down 37.5p. It then gained 16.5p before settling unchanged at 1,058.5p, equalling its peak.

Selfridges, the department store, firmed 5.5p to 221p as British Land moved into the market again, mopping up 3.6m shares, lifting its stake to 9.4 per cent.

Waters, after a period of calm, made a splash with the little York Waterworks declaring the presence of possible bidders. The shares rose 105p to 445p with the "A" shares up 95p at 425p. The bid talks are thought to involve Anglian Water, little changed at 788.5p, or Yorkshire Water, up 5.5p to 515.5p. Thames Water was 41p higher at 1,086p, and Severn Trent, with a little help from Merrill Lynch, gained 34p to 976p.

ScottishPower, flexing its takeover muscles in the US, put on 25.5p to 629p on talk that it could itself face a bid, perhaps from a US operation.

JBA, the computer group, crashed 140p to 50p. A year ago the shares were 1,257.5p. The latest fall stemmed from a warning that a "significant operating loss" was expected. Oxford Molecular was also spraying caution, forecasting a loss. The shares slumped 5p to 37.5p; they have been as high as 465.5p.

Fibernet, with a high-speed communications network, said it would be in profits this year but would not achieve "the rather aggressive market expectations". The shares lost 23p to 375.5p.

The GRE (Guardian Royal Exchange) rumours went the rounds again with the ever-hopefuls talking about an AXA deal on Monday. The shares improved 7.5p to 242.75p. And renewed suggestions of a deal lifted General Electric Co. 31p to 569.5p; British Aerospace rose 27.5p to 519p.

Drugs shares were helped by Salomon Smith Barney interest. It suggested SkyePharma, 76.5p, could go to 200p and Glaxo Wellcome, up 43p to 2,165p, was given a 2,600p target; SmithKline Beecham, 27.5p higher at 846p, was given a 940p shot.

The TT engineering conglomerate, bidding for Hall Engineering, gave up 20.5p to 176p. Hall, unchanged at 119p, has a break-up value of up to 170, believe Albert E Sharp.

Arriva, the transport group, accelerated 16.5p to 401.5. New chief executive Bob Davies made investment presentations to institutional shareholders.

SEAQ VOLUME: 1.1 billion

SEAQ TRADES: 91,582

GILTS INDEX: N/A

ON-LINE, the high-flying computer group, was at one time up more than 50p; it closed 32.5p higher at 107.5p. On Monday the shares were 16.5p.

It is understood that all the activity has been in the market - the company says there has been no trading change since its shares were 16.5p. Two directors have sold shares to try to ease a liquidity problem.

FREEPAGES, the information group, firmed 2.25p to 18.5p as a large line of stock was cleared, seemingly by Cazenove.

The shares have come down from 49.5p but now the overhang has been removed they could go higher, particularly in view of the market's fascination with the Internet. The company has an Internet partnership with Microsoft.

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