Market Report: BTG surges higher on expectations of patent progress

Shares of BTG, the old British Technology Group, surged to a peak as the stock market sensed two securities houses were preparing detailed buy notes ahead of what could be a raft of encouraging trials and licensing agreements.

The price jumped 57.5p to 1,952.5p; a year ago the shares were 287p.

A former Government development agency, set up in 1949, BTG was sold to its staff for pounds 28.9m in 1992. It arrived on the market at 225p two years ago. Employees hold about 10 per cent of the capital.

BTG , now worth around pounds 340m, specialises in creating patents for new technologies and licensing them to international groups. Its portfolio is said to embrace 1,300 inventions.

Earlier this month BTG produced the latest in a series of encouraging deals when Genetics Institute, where the giant American Home Products has a majority stake, completed clinical trials for a blood clotting factor.

But the BTG portfolio is widely spread. It also embraces a new vehicle transmission system and there is speculation another major group had expressed interest in the BTG operation.

The rumoured buy recommendations are expected from Kleinwort Benson and Yamaichi which, according to market rumour, have recently spent long hours with the company.

Although BTG was one of the shares to stretch to a peak, the market stumbled on its gentle amble towards the Footsie 4,000 points target. The FT-SE 100 index ended 4.9 points down at 3,972.3 with Monday's New York peak blissfully ignored.

Racal Electronics was another share to attract interest. The price dipped 1p to 296.5p as the market became aware of stories the electronics group could be on the verge of a rights issue.

Racal is bidding for some cash hungry contracts. It is battling for a pounds 1.5bn Government order to create a national communications system for emergency services. And it is also involved in the bidding for a pounds 1bn contract to replace the range of fixed telecoms networks used by Briton's armed forces. The DFTS (defence fixed telecommunications system) order is expected to be placed later this year.

With Racal clinching a series of smaller deals there could be a need for a cash injection to fund its expansion.

BAT Industries jumped 23.5p to 462.5p as it at last discovered some encouraging smoke signals in the haze of its US litigation nightmare.

It seems a Florida ruling should isolate the assets of BAT and its US holding company from the plethora of legal challenges.

But the market is growing increasingly perturbed by the amount of legislation the US tobacco groups face and even if BAT and its US holding company escape the claims Brown & Williamson, its main US subsidiary and a substantial part of the BAT empire, remains vulnerable.

Superstore chains had another difficult session with the alleged price war still hitting sentiment and the Tesco increase in market share adding to the unease among the other leading players. Tesco fell 5.5p to 297p; Safeway 5.5p to 326.5p and J Sainsbury 9p to 369.5p. Asda was the major casualty, off 5.75p to 103p, lowest since December.

Unilever, with Barclays de Zoete Wedd believed to have moved from buy to hold, and Kleinwort worrying about lower ice cream sales, fell 24.5p to 1,382p. Treats, an iced lolly business, no doubt started the Kleinwort rethink when it produced a chilly statement, leaving the shares, floated at 174p in June, down 34.5p at 100.5p. Unigate, thought to be starting a series of investment meetings, was little changed at 430p.

Christies International, the fine art auctioneer, gained 7p to 249.5p, a 12 month high, after buying a Bond Street picture dealer for around pounds 2m.

British Biotech added 8.5p to 201.5p ahead of a trading statement today. It is expected to reveal further progress by its Marimastat's cancer treatment.

Roxboro, an electronics group, fused 80.5p to 232.5p following a cautious statement and Exco, the money broker, lost 21p to 66p in response to a halved dividend. Watmoughs, the printing group, retreated 44.5p to 413.5p on lower interim profits.

Easynet's Microsoft links were good for another 23p on the shares at 81.5p and Games Workshop put on 9p to 471.5p as Credit Lyonnais Laing made positive noises, forecasting profits this year of pounds 9.9m and pounds 11.6m next.

Trafficmaster, the car monitoring systems group, edged forward 2.5p to 336p after declaring a 96.6 per cent rights take-up. The rump was placed by SBC Warburg at about 330p.

TAKING STOCK

rGranada's love affair with Yorkshire-Tyne Tees TV is growing more intense. It has exercised warrants which could lift its stake to approaching 27 per cent, a solid platform for the long awaited bid. But the move also locks in profits of around pounds 19m, a handy addition to Granada's figures for the year ending this month and probably the main reason for the exercise. Yorkshire fell 10p to 1,150p.

rDMatek, an Israeli hi-tech group, gained 15p to 87.5p as a German fund manager picked up a 15 per cent stake its off-shoot AVT. The price paid values AVT at pounds 15m. DMaket's capitalisation is pounds 16.5m

rWeeks, an environmental consultancy, is coming to AIM next week after a placing at 5p by stockbroker Ellis & Partners. Profits last year were pounds 728,000.