US charge keeps shares moving: Market Report

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The Independent Online
AN American charge rescued the stock market. For much of the day it looked as though shares were suffering from exhaustion after their heroics. But encouraging figures on US inflation changed the atmosphere.

New York surged and, with added encouragement from the futures market, shares moved ahead. By the close the FT-SE 100 index was up 30.9 points at 3,265.1. Government stocks scored gains of up to half a point.

In the past four trading days the index has risen 93.8 points, underlining the change in sentiment that has filtered into the market during August.

Encouraging economic figures on both sides of the Atlantic have had a dramatic influence. The US interest rate increase has been comfortably accommodated and although a higher base rate is expected it should not, with the economy strengthening, cause any anxiety.

NatWest Securities believes the base rate could go up in November, with a rise to 6 per cent 'on the cards'.

Once again talk of corporate activity was in the air. Unilever, the Anglo-Dutch giant, was in outstanding form, up 30p at 1,169p. Rumours have abounded that it has an American acquisition on its plate. The household division of Eastman Kodak is one story; another is more intriguing, a strike for Heinz, the US food giant.

Electricities continued to generate excitement. Professor Stephen Littlechild's pricing directive was unexpectedly soft. But it has taken time for the sheer extent of his leniency to sink in. With talk of takeovers and defensive mergers among the electricity groups, the sector has enjoyed a remarkable power surge, producing the best sector performance this year.

For example, Eastern Electricity stood at 709p before the Littlechild pronouncement. The shares are now 863p, up a further 15p.

Although dividend yields still look attractive, there are hesitant signs that shares have moved ahead too quickly. Yamaichi, the Japanese securities house, is still keen on most power shares but suggests switching out of two - Seeboard and Eastern.

Waters have lagged behind, but with generally higher dividend yields they are attracting increasing attention.

Insurances were firm, reviving stories of a big bid in the sector. Sun Alliance, up 12p at 350p, remains the favoured target.

It was the sort of day when sell recommendations made little impact. Bass edged ahead 2p to 588p despite SG Warburg caution; Scottish & Newcastle fell 2p to 529p as UBS said sell.

Boots advanced 7p to 579p with Barclays de Zoete Wedd confident. It suggested any pharmaceutical disposal could be accompanied by a share buy-back to 'offset much of the seemingly inevitable dilution from a sale in which cash proceeds are left to generate modest financial returns'.

Ditching its drug side would leave Boots demanding a positive rerating.

Great Universal Stores was subdued, down 3p at 598p, on suspicions of a 2 million share overhang. Storehouse responded to a buy recommendation from Hoare Govett with a 4.5p gain to 221p. But Body Shop International remained in the doldrums, down 3p at 218p after brushing 215p.

Among food retailers, Asda was again busily traded, with suggestions that it could be the group in talks with Argyll to buy the 270-strong Lo-Cost food discounting chain. Argyll gained another 11.5p to 315p.

Securicor, the cellular telephone and security group, was galvanised into action by an agency cross of 55,000 'A' shares at 975p. The deal prompted a 54p jump to 984p, with the ordinary shares up 55p at 1,440p. Security Services, controlled by Securicor, gained 22p to 754p.

Rank Organisation enjoyed Smith New Court support, up 13p at 426p, but Euro Disney weakened 9p to 117p on selling in Paris following sell comments from Paribas.

Daily Mail & General Trust was ruffled by price-war fears as some copies of the Daily Mail were priced at 20p. But the group anxiously dispelled such worries - the 20p was an error. The shares shaded 5p to 1,355p.

Hopes of more action in broadcasting shares were evident, with HTV up 6p at 171p.

Among second-liners to make further progress were Andrews Sykes, 10p to 78p; Waverley Mining, 6p to 92p; and Tottenham Hotspur, another 5p to 131p.

After early hesitancy the FT-SE 100 index jumped 30.9 points to 3,265.1 and the supporting FT-SE 250 index rose 17.6 to 3,807. Turnover was 584.9 million shares with 32,462 bargains recorded. Government stocks advanced by up to pounds 1/2.

Middlesex Holdings, the metals group with strong Russian links, has attracted a Moscow institutional shareholder, the Vozrozhdeniye Bank. When chief executive Masoud Alikhani moved in, Russian investors took substantial interests. The bank is buying a 2.5 per cent stake by acquiring 14.3 million new shares at 4.5p. Middlesex edged forward 0.25p to 4.5p.

WEW, the old Amber Day, continues to attract Warburg Pincus, the US investment house. The Americans picked up 3.8 million shares at around 35p, lifting their interest to 27.6 per cent. They are averaging down, having earlier acquired shares, in a rights issue, at 56p. WEW has had a colourful time in recent years, with the shares moving from 24p to 86p in eight months.