Yeltsin rumours push Footsie back towards 4,000; MARKET REPORT

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The Independent Online
The FTSE 100 index drifted back towards the 4,000 level yesterday, weighed down by a weak opening on Wall Street and rumours, later denied by Moscow officials, that Russian president Boris Yeltsin had either stepped down or died.

Mr Yeltsin is said to be still working from a hospital bed outside the Russian capital, but the scare added to the jittery state of global bond and equity markets. The index of leading UK shares closed down 26.3 points at 4,009.3, just off their intraday lows.

Drugs were on a downer after US selling and a bearish broker comment on Glaxo Wellcome from Lehman Brothers.

The broker cut its recommendation to hold from buy on concerns that Glaxo had been upstaged by Biochem Pharma in releasing data about its lamivudine drug for Hepatitis B. Glaxo's shares were the weakest among the blue chips, falling 31p to 990p. Zeneca slipped 38p to 1612.5p in sympathy, as did SmithKline Beecham, which slipped 15.5p to 800p despite Merrill Lynch doubling its core holding in the company after meeting directors.

Oils, another favoured sector for US investors, also suffered as Brent crude prices struggled to hold $24 a barrel. Enterprise closed 16.5p lower at 568.5p, Lasmo was down 5.5p at 218.5p and BP was off 11p at 688.5p while Shell closed 12p lower at 1028p.

Day two of the rest of Eurotunnel's stock market life saw further selling, this time from French investors. The shares dived 11.5p to 93.5p amid renewed uncertainties about this week's pounds 4.7bn debt restructuring deal.

BT continued its poor run, declining 7.5p to 348.5p - the lowest level in three months - after Germany's RWE called off its telecoms alliance with the UK operator and German utility Viag.

After the market closed Cable & Wireless, down 4p at 430p, confirmed it had extended its alliance with Veba, another German utility, to include RWE in a bid to address the German telecoms market, the largest in Europe.

On the positive side, supermarket giant Asda was among the top Footsie performers, putting on 2p to 109.75p after a buy recommendation from broker SBC Warburg.

Glass maker Pilkington managed a 3.5p climb to 187.5p, making the shares the best Footsie performers of the day. There was vague talk that optimism on German interest rates was supporting the stock, though analysts fear that weak trading conditions in continental Europe could see profits well below the pounds 180m they currently have pencilled in.

Millennium & Copthorne added 2p to 320p on further consideration of yesterday's pounds 81m purchase of the Britannia hotel in London's Grosvenor Square. House broker NatWest likes the deal, M&C's first since flotation in April, and has raised next year's profit forecast by pounds 1m to pounds 20.9m.

The bomb attacks on British army headquarters outside Belfast, and the de facto end of the IRA's two-year ceasefire in Northern Ireland, hit Dublin-based Jurys Hotel, down 10p to 280p.

Investors' love affair with pub companies and themed restaurant groups shows no signs of waning. Regent Inns raced ahead 6p to 252.5p, PizzaExpress served up a 6p increase to 499.5p and JD Wetherspoon was again in demand, up 11p to 1147.5p.

Shares in Sheffield-based Eurovein, one of the new issue flops from the class of 1994, continued their slow rehabilitation, closing 14p higher at 67.5p as the blade maker returned to the black. Pre-tax profits reached pounds 1.4m in the year to July versus a loss of pounds 1.2m a year ago following a revamp of management and strategy at its surface treatment, filtration and component manufacturing units. The dividend is raised to 3p from 0.51p.

Floated at 141p in November 1994, the shares fell to as low as 33p on the back of two profit warnings and heavy losses. But interest in the shares grew earlier this year when Manchester-based engineer Villiers built up a 12.3 per cent stake. House broker Albert E Sharp looks for pre-tax profits this year of pounds 2m, putting the shares on a forward multiple of less than seven and yielding 7.5 per cent.

Shares in Frost motored ahead 7.5p to 130p after the petrol retailer said an easing in the forecourt price war had led to a strong recovery at its Save stations.

Albert Fisher added 1.25p to 40.75p with a healthy 5.1 million shares traded. Hopes are rising that the food processor will announce the sale of its US distribution business. A price tag of pounds 60m has been suggested.