Wall Street alarums and excursions torture Footsie

MARKET REPORT

American influences, real and rumoured, tortured the stock market. A variety of stories swirled around, ranging from forecasts that US producer prices would cause alarm and force interest rates higher to talk that a leading US investment house was dumping equities to pile cash.

Other influences included suggestions a top Tokyo investment group was in financial trouble and a profit warning was on its way from IBM. To pile on the agony worries surfaced that the US markets were losing their appeal to Japanese investors.

There appeared to be not a grain of truth in the plenitude of tittle- tattle. Even the producer prices figures were in line with expectations. Yet shares took fright. Footsie fell away 71.9 points, ending 53.2 lower at 3,982.5. Second- and third-liners were also dragged down. Government stocks fell by more than pounds 1. The surrender to the rumour-mongers was a direct result of last week's attempt by Alan Greenspan, the US banking chief, to reduce the temperature of the Dow Jones Average.

He had little success on Friday but his comments have instilled a new uncertainty in markets around the world and in the resulting nervous climate the bears can enjoy a clear run.

Many investors are now fearing, even looking, for a share correction, if not a crash. Mr Greenspan has, in the short term, shattered confidence; adequately illustrated by New York's poor performance during London trading.

The atmosphere Mr Greenspan has created has caught many strategists on the hop. Although there is still support for the theory the market will enjoy its traditional Christmas party hopes for a determined Footsie run above 4,000 points have been eroded. The taut political situation and the looming election seem destined to heighten anxiety in the new year.

The grandly named FTSE Actuaries UK Indices Committee picked a poor day to confirm the relegation from Footsie of such pillars of the industrial establishment as Courtaulds and Pilkington. They will be replaced by Hays, once owned by the Kuwait Investment Office and something of a new issue flop when it was floated in 1989, and Mercury Asset Management.

The supporting 250 index welcomes its first football club, Manchester Utd. Other newcomers include Biocompatibles International and PizzaExpress. Matthew Clark, which claims to be a victim of the alcopop craze, and Chiroscience are among the casualties.

"ManU" marked its promotion by raising pounds 16.7m through the sale of 3 million shares to help pay for ground extensions and, it was implied, meeting further transfer fees. A director, Amer Al Midani, sold 600,000 shares. The deals were completed by Merrill Lynch.

Rival Chelsea Village was also cash-raising; it pulled in pounds 825,000 placing shares at 110p and issued another 20,000 to its stockbroker, Ellis & Partners, to cover its fee. Manchester shares gained 6.5p to 584p and Chelsea held at 117.5p.

Insurance brokers were ruffled by the $1.23bn US take-over bid by Aon for Alexander & Alexander. The two US groups had been confidently expected to target a domestic group, possibly Sedgwick which fell 5p to 122.5p. Willis Corroon, another candidate, slipped 4.5p to 129.5p.

Burmah Castrol was the best performing blue chip, squeezed 20p higher to 1,083.5p. Other oils, reflecting the coming Iraqi flow following the oil-for-food deal fell back with British Petroleum off 18.5p to 667.5p. British Steel chipped in with a 2.5p gain to 167.75p. Some lumpy trades reawakened a suspicion the steel giant could be planning a big corporate deal.

RJB Mining staged a suggestion of a rally, up 4.5p to 377p. Airtours, as upgrades followed its 46 per cent profits rise, improved 11.5p to 714.5p.

Cadbury Schweppes slipped 1p to 483p as its round of investment meetings continued. Many analysts have felt obliged to cut their forecasts.

There is growing concern about Cadbury's US adventures, particularly its Dr Pepper/Seven-up soft drinks business which is thought to be finding the going tough against the might of Coca-Cola and Pepsi-Cola.

The daily crop of profit warnings lowered SEP Industrial 9p to 41p and Chemring, the lifejackets group, 45p to 290p.

Newcomer SDX Business Systems survived the gloom, closing at 172.5p from its 160p placing.

The group designs and develops digital communication systems.

Taking Stock

Shares of Andrews Sykes, the air conditioners and pumps group, stretched 12.5p to 505p, a new high. There is talk of an investment presentation. Stockbroker Teather & Greenwood is looking for profits of pounds 7.3m this year, up from pounds 4.7m for nine months. Next year's forecast is pounds 8m. French millionaire Jacques Murray controls it.

Tex, the engineering and plastic group, improved 6.5p to 120p, a 12 month high. It has won a pounds 6m contract to supply engineering plant to the Philippines. The group's order book was already improving and hopes are high profits this year will record a sharp increase, perhaps reaching pounds 1m.

Kenmare Resources jumped 2p to 27.25p in brisk trade on hopes of a big gold find in Mozambique.