Equities surge with encouragement from New York

Shares surged to their highest since February last year, the month they reached their all-time peak. In often busy trading the FT-SE 100 index jumped 35.5 points to 3,327.3, with New York again providing much of the encouragement.

A strong government stocks market, with prices lifted by up to pounds 1.75, and an array of better-than-expected corporate reports and results added to the excitement. The declining possibility that interest rates will be pushed higher is also helping the stock market's performance.

It was the start of the US rates spiral that took shares off the boil last year. And since then the market has been tormented by rate considerations.

Until recently it seemed the upward trend was set to continue. But recent US statistics have lowered the transatlantic temperature, and yesterday's fall in durable goods orders added to the more relaxed atmosphere.

In Britain, the Chancellor's resistance to pressure to increase rates is looking increasingly realistic, with the latest slowdown in gross domestic product growth cited as justification for - at least for the time being - an unchanged rates policy.

Argyll, Bass, Courtaulds and Williams Holdings were among blue chips to move higher on trading considerations.

With Bass indicating it could be prepared to flex its corporate muscles to increase its UK market share, there was a flicker of excitement among the regional brewers, with some wondering whether the takeover ferment of yesteryear could be revived. Vaux, the Sunderland group, rose 9p to 238p.

Carlton Communications' sharp profit advance, however, failed to stimulate the shares. Worries the new media ownership rules will provoke the group to charge into the takeover arena did the damage, leaving the price 17p lower at 942p.

Yorkshire-Tyne Tees TV Holdings remained dull, retreating another 10p to 476p, a 46p decline since the changes became known.

Radio shares offered a much more welcoming reception. Capital were up a further 16p to 458p, Chiltern gained 30p to 308p and Metro advanced 13p to 466p. Radiotrust added a further 3p to 80p.

Builders and related shares managed - but only just - to join the party. Negative comments on the industry from Smith New Court retarded enthusiasm. The securities house was particularly harsh on Tarmac, suggesting 120p was a fair value. The price fell 1.5p to 124p.

Redland eased 4p to 446p as SG Warburg suggested a switch into RMC, 16p higher at 1,108p.

Properties were more enthusiastic. Land Securities improved 25p to 617p in response to its 2.4 per cent asset value increase, underlining that commercial and industrial properties are not suffering the acute woes of the residential market, which continues to depress house builders. But British Land gained 16p to 403p as Smith said it had the best profile for growth.

Peel, reflecting the Lords go-ahead for its Manchester shopping centre, gained 30p to 265p.

Kleinwort Benson lost some of its takeover froth as Credit Lyonnais Laing, for long a keen supporter of the shares, reduced its profit forecast from pounds 113m to pounds 90m. The shares fell 26p to 664p.

Lloyds Bank gained 17p to 679p despite sell advice from Williams de Broe. The shares had outperformed since the Cheltenham & Gloucester Building Society deal. "The prospect that margin pressure and slower loan growth may temper previous optimism" has prompted the stockbroker to suggest profits should be taken.

VSEL slipped 8p to 1,775p as the market awaited the outbreak of hostilities, with some anticipating a British Aerospace strike today.

Rank Organisation's emergence as a possible buyer of the up-for-sale MGM cinema chain, lowered the leisure group 4p to 423p.

On the drugs pitch patience was being strained by the lack of activity in the signalled Fisons/Medeva get-together.

Stories continue to circulate that the talks are deadlocked and the proposed Fisons takeover will soon be called off. Fisons fell 2.5p to 175.5p and Medeva 2p to 232p.

Quality Care Homes improved 9p to 288p. The group last week rejected a 330p-a-share offer from Sun Healthcare, the US group that has extensive operations in this country and has taken a 15 per cent interest in the Ashbourne nursing homes chain. Duncan Bannatyne, chairman and founder of QCH with 66 per cent of the capital, refused to support the offer. Sun is expected to mount a full bid for Ashbourne, formerly part of Stakis, the casino and hotel group.

Queens Moat Houses had another busy session but the price fell 2.5p to 14.25p. Earlier this week the shares touched 20p. Lionheart, a household products group, jumped 1.5p to 4.25p as it became known it is selling its Sloane sales systems business to Princedale for pounds 10m. Princedale stuck at 25p.

A comforting trading statement pulled Proteus, the loss- making drugs designer, 32p higher to 107p.