Market Report: Feast for blue chips leaves Footsie a whisker off record

Investors continued to feed their appetite for blue chips yesterday, and sent the Footsie rapidly towards an all-time high on the back of another portion of good results from leading companies. Trading was good with more than 900 million shares changing hands.

Footsie finished 64.9 points higher at 4,960.6, a whisker off the record close of 4,964.2 three weeks ago. A weak Wall Street opening was ignored.

Of yesterday's results, BAA's first-quarter figures sent its shares up 20p to 580.5p, amid bullish scribblings from Hoare Govett and Societe Generale. BP, which unveiled much better-than-expected second-quarter results, closed up 39.5p at 861.5p after it said it would start to buy back shares.

Shell, in heavy turnover, joined the fun and ended up 13.5p to 458p. The company reports results tomorrow.

However, NatWest's disappointing interim results failed to check the market's overall rise, but stopped the bank entering the financial sector's equivalent of the Ivy League. The shares shed 35p to 835p.

NatWest was deluged by negative brokers' notes from Kleinwort Benson, Schroders and Merrill Lynch among others. And the bank's attempts to pour cold water on its problems did nothing to help the share price. The usual suspects joined NatWest's decline, with Barclays, which reports tomorrow, losing 9p to pounds 12.78, despite "accumulate" advice from Merrill Lynch.

Other financials could do no wrong though, with HSBC - which reported excellent results earlier in the week - lapping up extremely positive noises from just about every analyst in town. HSBC rose 13p to a record pounds 22.51.

Pearson continued its renaissance after Monday's better-than-expected interims. The media conglomerate was the number one Footsie climber, adding 47.5p to 740p. Analysts said that the market was relieved that the chief executive, Marjorie Scardino, had set a target of doubling Pearson's value within five years.

"Buy" notes from BZW and Panmure Gordon, and "add" advice from NatWest egged investors on.

Reuters was another media stock in demand, up 28p to 663p. Investors have spurned the company in recent months after concerns over the effects of the strong pound.

Dorling Kindersley, which has not been asked for in recent months was also feeling loved. It added 14p to 242.5p, encouraged by an upgrade from Merrill Lynch.

Pharmaceuticals see-sawed again after looking poorly on Monday.

The sector experienced a modest resurgence, led by Glaxo Wellcome, which jumped 24.5p to pounds 13.26 after Novopharm secured a deal to supply Glaxo's Zantac ulcer drug to the US market. Zeneca followed suit, despite losing its finance director to GEC. The company leapt 39p to pounds 20.42. Cantab Pharamceuticals also improved, up 5p to 687.5p on good interim results.

Investors were keen on GEC, after its nimble poaching of Zeneca's finance director. The company, which ended 17.5p better at 361.5p, was also buoyed by reports in a French newspaper that GEC and Framatome planned to bid for the energy division of Westinghouse Electric Corp.

Investors were not prepared to gamble on London Clubs, which was the worst performing second-liner after its acquisition of Capital Corporation was blocked by Margaret Beckett, President of the Board of Trade.

The casinos group dropped 16p to 386.5p, while the object of its affections, Capital Corporation, did little better, falling 19p to 165p. Willis Corroon was also in the doldrums after sterling hit profits. The company's plight was made worse by a "sell" note from Societe Generale, and it closed down 1.5p, at 126p.

Croda International featured strongly among second liners, adding 12p to 315.5p after Merrill Lynch said the stock was undervalued. Mayflower was also boosted by brokers' comments, with Societe Generale and Kleinwort Benson both advising investors to buy.

The company pleased analysts with its interim results, and added 6p in morning trading. It closed 3.5p stronger at 158p.

BBA Group improved 10p to 358p after buying the Germany company, Becorit, for pounds 28m, and WPP Group firmed 3p ahead of next week's interim results.

Network Technology, the AIM-listed network connectivity specialist came to the full market yesterday, but seemed to have passed most marketmakers by.

Placed at 158p, it started trading at 162.5p and closed unchanged.