Zeneca moves against the tide on talk of a Swiss bid

MARKET REPORT

Bank on shares moving against the tide - it's an old stock market saying which, unlike many, contains the ring of truth.

Zeneca and Lloyds Abbey Life offered contrary supporters an opportunity to display their courage as most shares slipped and slithered with many investors opting to snatch profits after this month's strong run.

In occasionally brisk trading the drugs giant, for so long one of the market's main takeover plays, climbed to a closing peak, up 20.5p (after 27.5p) to 1,538p.

This week's profit presentation by Roche, the Swiss group, prompted the gain. The company is cash-rich and anxious to expand; it wants to recapture its position as Switzerland's top drugs group.

The Swiss have, over the years, established a reputation for anticipating takeover activity. Rowntree Mackintosh, the sweets group, and Consolidated Goldfields are two prime examples of Swiss buying signalling corporate action. Last year's offer for Rothmans International, the cigarette group, was said to have been preceded by Swiss interest.

The Swiss, according to many observers, were mainly responsible for yesterday's Zeneca action. "They - and we - expect a bid; its a question of timing," said one dealer.

Zeneca is valued at around pounds 14.3bn. It no doubt feels it is too big to fall to a hostile strike. And in recent months it has underlined its reluctance to go along with bid stories.

It could be argued that despite their glamour rating its shares are merely reflecting growth prospects and the stream of new drugs likely to appear in the next few years.

Lloyds Abbey Life, the insurance group, ignored the scorn poured on the rumour of a Prudential Corporation strike which lifted its shares 32p on Wednesday. They improved a further 12.5p to 605p on suggestions Lloyds TSB, with 62.5 per cent of the capital, is about to emerge as the bidder.

Such an offer, said to be 675p a share, would make much more sense than the rumoured Pru attack. After selling its Mercantile & General reinsurance arm the Pru has cash to spare but Lloyds TSB, with the bolt-on advantages LAL offers, is an unlikely seller. The rest of the market, after its recent spectacular run, was in ragged retreat, largely unsettled by a New York plunge on higher interest rate fears.

The FT-SE 100 index fell 33.7 points to 3,885 and even the seemingly remorseless progress of the supporting FT-SE 250 index was halted. After a 20-day winning streak it suffered a 5.7 points setback to 4,432.1.

Asda, the superstores chain, fell 2.75p to 110.5p, lowest since May, as the market fretted about Archie Norman's decision to reduce his involvement. He has been the inspiration behind the group's revival. When he arrived four years ago the shares were bumping along at around 23p.

Allders, the department store group, added 6p to 214.5p awaiting a share buyback or special dividend and Yorkshire Electricity enjoyed a late run, gaining 15.5p to 777p on rumours a buy-back was planned.

General Electric Co remained unsettled by the George Simpson debate and Salomon Brothers caution; the shares fell 4.5p to 380.5p.

Courtaulds, the chemical group, was ruffled by losses suffered by its Austrian rival, Lenzings, falling 8.5p to 436.6p.

Ladbroke's better-than-expected figures and marketing deal with Hilton Hotels Corporation lifted the price 3.5p to 209.5p but Rolls-Royce, down 5.5p to 225.5p. and T&N, 8.5p easier at 135p, lost ground after results.

EMI, the showbiz group, spun 38.5p lower to 1,447.5p on forecasts of a CD and cassettes slowdown. Tring International, the compact disco group, underlined industry worries with a profits warning that left the shares down 6p at 18.5p. A year ago they were 118p.

British Aerospace broke through the 1,000p barrier with a 13.5p gain to 1,008.5p and expectations of a cheerful trading statement soon lifted Airtours 12.5p to 598.5p.

An attempt by Lord Cairns, chairman of BAT Industries, to rally the shareholder troops after the US tobacco litigation setback had no immediate impact with the shares falling 8.5p to 438.5p.

Greene King, the East Anglian brewer which recently splashed out pounds 297.5m for The Magic Pub Co, frothed up 6p to 625p as a buyer shopped for a million shares.

With its enlarged pubs estate Greene King is seen, in some quarters, as better value than some of the pure pub companies.

TAKING STOCK

Ex-Lands, the property group, has been a disappointing investment. The shares were more than 50p at the start of the 1990's.

Even the demerger of its golf interests have failed to spark interest and the price has drifted steadily lower, reaching 7.5p.

Yesterday the shares perked up on suggestions the group could be involved in bid talks. In busy trading they put on 1p to 8.5p with Raglan Properties one of those named as a possible suitor.

Waverley Mining fell to a 12-month low of 69.5p. The shares were 116p at the start of the year.

There is persistent small selling with cheerful overseas developments overshadowed by nagging worries about its Scottish coal interests.