Market Report: BG burns bright as fragile Footsie drifts

IS MORE shareholder-friendly action planned at BG, British Gas as was? Although Footsie fell again as the stock market continued to fret about the problems in Brazil, and to a lesser extent China, shares of the former nationalised group powered ahead 29.25p to 409.5p.

BG has already returned more than pounds 1bn to shareholders and hived off the Centrica domestic gas operation.

A further handout is widely expected, and there are hopes that it will announce some form of distribution, possibly a special dividend or the creation of buyback shares, when it rolls out its year's results next month.

In the present market turmoil BG clearly has defensive meritsl although its sprawling exploration activities have increased the element of risk.

The shares have been one of the best Footsie performers in the past year. They were just below 300p in the spring and nudged 430p in November. When in 1996 the group was the joker in the Footsie pack, the shares fell to 119.5p.

BG scored the second biggest Footsie gain. Top of the leader board was Dixons, which on its figures and attraction as an Internet play, soared 100.5p (after 114p) to a 1,058.5 peak.

Footsie, in heavy trading, fell 29.9 points to 5,820.2 - at one time it was up 87.7. Conditions were much calmer than on Wednesday when shares were roasted by the Brazilian devaluation. But the market's fragility was underlined by Footsie's volatility.

Still, despite further weakness in New York, two-way trading was the order of the day with buyers prepared to mop up what they perceived to be cheap stock.

Turnover topped 1.3 billion shares, with brick maker Ibstock the most heavily traded as bidder CRH bought, in a single deal, the 138.7 million shares held by Wienerberger, the Austrian group, at its 70p offer price. CRH now has 80.5 per cent of the capital. Ibstock held at 69.5p.

Marks & Spencer, following its calamitous profits warning, came next, accounting for 62.5 million. The once proud king of the high street led the Footsie retreat, suffering a 53.75p collapse to 339.75p, its lowest since l993. The price was 664.5p only 18 months ago.

Not surprisingly its suppliers caught the Marks chill. Northern Foods tumbled 8p to 113.5p and Terranova 2.5p to 93p. Dewhirst, the clothing group, fell 6.5p to 77.5p and toiletries supplier Peter Black 14p to 245p. The Marks misery even extended to supermarkets: the surprise fall in its food sales ruffled Asda, off 4.5p to 153p, and J Sainsbury, 11.75p to 449.75p.

The rest of the Christmas messages were mixed. Great Universal Stores rose 26p to 607p but Boots lost 60.5p to 938p. Storehouse retreated 9.5p to 112.5p and computer games retailer Game clicked down 62p to 103.5p. House of Fraser rose 4p to 57.5p and Rosebys fell 1.5p to 83p.

Sears jumped 34p to 344.5p as retail entrepreneur Philip Green, backed by the Barclay brothers, bid 340p a share. The offer was rejected but the market expects a Green victory or a counter-offer.

WH Smith, presumably on its Internet ambitions, jumped 54p to 591p, a peak.

Beers were a little firmer after their shenanigans. Bass improved 1.5p to 788p as BT Alex.Brown became more positive. Whitbread frothed up 23.5p to 799p with Alex.Brown saying buy, but SG Securities offered sell advice and plans to cut its profits estimate.

Insurer GRE, where the market is growing tired of awaiting bid action, fell 2p to 335.5p, although Schroders suggested a 440p break-up value.

Vodafone improved 12p to 1,051.5p as Alex.Brown said the shares could be worth 1,500p if the AirTouch deal went through on "acceptable terms".

Telewest Communications, with Dresdner Kleinwort Benson support, gained 15.5p to 218p. Compass, the contract caterer, rose 25p to 725p with Paribas suggesting a 930p target.

Hall Engineering hardened 12p to 119p as aggressive TT launched a hostile 97p per share cash offer, which was promptly rejected by Hall. Tex, an engineer, strengthened 3.5p to 66p as Edward La Bas lifted its stake to 18.76 per cent.

Mirror, the newspaper group, gained 2.5p to 173p as hopes rose that its on-off merger with publisher Trinity could be on again.

There were rumours of corporate action among fund managers. Johnson Fry jumped 19.5p to 133.5p. One suggestion was that the smaller Farlake fund management group planned a link, possibly a reverse takeover. Farlake rose 15.5p to 360p, highest since 1996.

Rackwood, a mining company, firmed 0.75p to 4.75p. Robert Young, whose haulage company has a 6 per cent stake, has become managing director. The company's share price has collapsed from its level of 62p two years ago.

Abbot, the oil services group whose shares fell on Wednesday on worries that its merger with Norway's ProSafe had hit trouble, recovered 18p to 159.5p.

The food group, John Lusty, held its price at 6p after seeing analysts.

SEAQ VOLUME: 1.3 billion

SEAQ TRADES: 82,366

GILTS INDEX: 116.23 +0.25

ON-LINE, the computer group, continued its spectacular run - up another 17.5p to 75p.

Director Clem Chambers has sold more shares to improve what is a highly illiquid market. He now has 31.9 per cent after unloading 125,000. Because he is a reluctant seller he has been given options over 125,000 shares at the prices at which he sold - 50p, 60p and 70p. The shares were 16.5p on Monday.

SHARES OF Cortecs, the struggling drugs developer which three years ago topped 400p, rose 2.75p to 27.5p on hopes that Nomura, a keen follower of the drug tiddlers, will lift its stake.

Former chairman and chief executive Glen Travers sold 0.29 per cent and now has just under 5 per cent. Nomura, with 6.33 per cent, is thought to be keen to mop up the balance of the Travers interest.