Market Report: Blue chips take the lead as shares rally

Derek Pain
Saturday 22 October 2011 23:09

ANOTHER whiff of lower interest rates encouraged the stock market yesterday.

The much better-than-expected inflation figures submerged the cautionary comments of the Chancellor and future Governor of the Bank of England and the FT-SE 100, at one time nursing a 20.2-point fall, ended 8.7 higher at 2,843.

Government stocks managed to exeed the equity enthusiasm, often making strong gains.

For the second day in succession blue chip shares made the running. Second-liners were subdued and there were some sharp falls among fringe shares.

Still, it was fitting that a record-breaking account, which saw the FT-SE 100 index top 2,900 for just one minute, should end on a firm note. In the two- week trading period the index gained 35.8.

Bank shares were in fine form on the surprisingly sharp profit increase by Lloyds Bank. Fears of a dividend cut by Barclays receded and the shares rose 20 to 435p. National Westminster also gained 20p to 452p. Lloyds rose 6p to 534p.

TSB Group reflected the failure of any Lloyds takeover initiative, falling 2p to 170p. Lloyds Abbey Life, another rumoured target, fell 12p to 441p. But the other possible target of the Black Horse bank, Standard Chartered, continued to move ahead as some took the view that any bid would occur after the present banking profits season. The shares rose 8p to 653p.

Interest rate-sensitive shares were firm, with Boots gaining 11p to 490p and Kingfisher 13p to 527p. But the latest poor round of beer figures - production was down 6.5 per cent in November - unsettled some of the beerage. Bass fell 12p to 578p.

Supermarket shares were firm, helped by rumours that one of the big chains had concluded a wage settlement.

J Sainsbury put on 15p to 529p and Tesco 13p to 243p. Asda, with a little help from NatWest Securities, added 2p to 60.5p.

Clifford Foods responded to the agreed offer from Unigate. The voting shares jumped 50p to 573p and the 'A' 34p to 253p. Unigate improved 15p to 342p and Northern Foods, expressing relief that it was not the bidder, advanced 6p to 265p.

The little Dumas food group, which has been revamped and will soon be known as John Lusty, returned at 5p. The shares were suspended at 8p.

Vickers, up 3p to 134p, continued to reflect the perceived hovering presence of Charter Consolidated. Many suspect Charter will mount a bid following the disposal of its shareholding in the Johnson Matthey metals group. Unitech, the electronic group, advanced 17p to 218p as bid speculation resurfaced.

Airtours weakened on fears that it will be forced to increase its offer for the rival Owners Abroad, assuming its bid is not referred to the Monopolies and Mergers Commission. The shares fell 3p to 277p and Owners Abroad improved 1p to 119p.

ML Laboratories had another uneven session. At one time down 40p, the shares closed 10p off at 1,078p. The market has been unsettled by director share sales and the fear that stock is still on offer.

Amstrad, the computer group where a move to go private was rejected by shareholders, slipped 0.5p to 22.5p. Peter Cundill & Associates, the adventurous Canadian investment house, has picked up 5.5 million shares, lifting its stake to 5 per cent.

Hawthorn Leslie, the old marine engineer now involved in telephones, slipped 0.75p to 2.75p after it disclosed talks that could lead to an offer - below the opening share price.

But Castle Mill International, the clothing and giftware group, was firm on hopes of an injection. The shares have edged ahead in the past week on vague talk that the troubled group was about to be revamped. New shareholders have arrived, spurring the price 1p to 5.75p.

Mallet, the antique dealer, slipped 2p to 68p as it disclosed takeover talks had ended. Although the identity of the would- be bidder was not disclosed the market was convinced it was Asprey, the upmarket jeweller.

The blow of the bidder's departure was softened by Mallet saying first-half losses had been eliminated and a profit of pounds 500,000 was likely for the year.

Essex Furniture, figures in the next account, rose 7p to 108p but Cupid, the bridal wear group, celebrated the St Valentine weekend with the forecast of a 'substantial loss'. Talks are taking place for a group of investors to pump new cash into the business. The shares fell 3p to 35p.

Brown & Jackson, the Poundstretcher retailer, which achieved the distinction of being the best-performing share of 1992, edged forward 1.25p to 14.25p.

Societe Generale Strauss Turnbull said buy. It suggested the dramatically changed group could make profits of pounds 2.4m this year and pounds 5.4m next. It even ventured pounds 11.1m in 1995 and pounds 15.1m in 1996. A pounds 6.3m loss is forecast for last year.

Brooke Tool Engineering held at 8p as Roger Shute, ex-BM Group, confirmed a 4.52 per cent stake.

The account ended on a firm note, with the FT-SE 100 index swinging between a 20.2-point loss and a 20.5 gain. It ended 8.7 higher at 2,843. The FT-SE 250 index was 0.2 down at 3,006.3. Trading was again busy at 830 million shares from 38,505 bargains. Government stocks were strong

Panmure Gordon is bringing Yorkshire Food Group to the market. A share placing early next month will value the dried fruit and nut group at more than pounds 30m. YFG has grown rapidly, helped by acquisitions. Profits in 1990 were pounds 316,000 from sales of pounds 15m; in the following year they were pounds 1.52m from pounds 49m and last year hit pounds 2.72m from sales of pounds 63.2m.

Expedier, to be renamed The Ticketing Group, is the latest tiddler to attract the speculators. Yesterday the rescue package, including the issue of 600 million shares, was approved. Dealings should start on Monday. The business takes in the First Call and Keith Prowse ticket agencies and a computerised box office system supplier. The shares rose 0.25p to 1.75p.

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