Market report: Frost in from cold as petrol giants temper price war

The forecourt petrol price war, which has devastated many independent garages, is losing some of its ferocity. Evidence is mounting the major oil groups are taking the sting out of the battle, a trend that helped Frost, the largest UK independent with nearly 5 per cent of the market, to move off its 90p low to 105p.

Shell is one of the giants to rein back its price-cutting activities. It has "reduced the amount of financial assistance" it offers some retailers which can represent 2p a litre.

The decision, which appears to match moves by other oil giants, has already led to higher prices at some of its petrol pumps.

Below-the-line promotion, however, remains intense. Shell is placing considerable faith in its loyalty scheme which already has 4 million followers and offers a range of incentives.

Frost, with interim figures next month, has been under intense pressure as the petrol war has flared. Its shares were 266p a year ago.

Whether the reduction in hostilities will encourage the supermarkets, which started the confrontation, to gently push their prices higher remains to be seen. Tesco, in the forefront of the petrol price-cutters, was little changed at 302.5p.

The oil groups were again inspired by expectations of strong crude demand. British Petroleum reached a 618p peak and Shell rose 9p to 932p. Lasmo gained 3p to 195p.

Footsie remained on course to attack its April high of 3,857.1 points with a 7.1 gain to 3,837.4; a poor New York opening was largely ignored. The supporting 250 index achieved its twelfth consecutive advance, admittedly a modest improvement to 4,356. Its peak is 4,568.5.

Banks enjoyed a firm session with Barclays, apparently the subject of investment presentations in the US by Merrill Lynch, gaining 15p to 909p, a 12-month high. Merchant bank Schroders remained in the takeover frame with its non-voting shares up 33p to 1,073p.

However with the voting shares little changed there was a school of thought that the family-controlled bank could be considering a touch of shareholder democracy by enfranchising the non-voters.

Conglomerates were unable to draw inspiration from Hanson's figures. Hanson fell 2p to 166.5p but Cookson managed a 1p gain to 251p although it is still likely to be elbowed from Footsie by the Thorn EMI demerger.

BTR had to contend with some unfriendly comments from ABN Amro Hoare Govett. Analyst David Ireland lopped his profit forecast from pounds 1.36m to pounds 1.3m and reduced his dividend expectations by 40 per cent to 8.81p. The shares relapsed 5.5p to 258p, the warrants' exercise price. Charter was one conglomerate to strengthen, up 30p to 871p, on Kleinwort Benson and SBC Warburg support.

Thorn EMI was little changed at 1,789p as the market indulged in estimating the post-demerger prices of the two halves. The EMI showbiz side was given a 1,370p valuation and Thorn, the rental business, around 440p.

Rentokil, interim figures next week, slipped 4.5p to 415p. Barclays de Zoete Wedd believes the services group, which acquired BET after a furious encounter earlier this year, is a sell.

Nyren Scott-Malden contends the shares are at least 10 per cent overvalued and BET has "significantly increased Rentokil's risk profile".

Airtours' holiday price increases lifted the shares a further 3p to 589p. Orange, the mobile telephone group which has been in the doldrums, rallied 7.5p to 187p, largely on NatWest Securities support.

RJB Mining dipped 14p to 499p on Warburg sell advice.

Zeneca edged to another peak, up 6p at 1,774p, and Chiroscience, a rumoured bid target, put on 7p to 408p.

Refuge, the insurance group, again displayed dissatisfaction with the planned merger with United Friendly. The shares, 539p in May, fell a further 12p to 374p, a year's low.

Profit warnings hit Microvitec, the computer group, down 13p to 40.5p, and Gibbon, a printing inks group, 42p to 122p.

Tom Cobleigh, the pubs chain, said it was not involved in takeover talks. Its biggest shareholder, however, has said it wants to sell. The shares fell 20p to 210p.

Yorkshire Tyne Tees Television lost 38p to 1,235p on reports Granada's interest was evaporating but Lloyds Chemists added 12p to 482p on indications of a new bid from Gehe of Germany.

Antonov, the gear box group, gained 5p to 76p on its licence deal.

TAKING STOCK

rGreenhills, running a theme restaurant at London's Trocadero, is short of market support. The shares, 20p in March, fell a further 1p to 6p. The company, which raised pounds 200,000 with a 14p a share placing last month, plans another theme restaurant, the Dream Factory. It has agreed to buy a vodka business in exchange for shares and wants to raise further capital by placing shares "at the best prevailing market price". Nobody at the company was available to comment whether it will press ahead with its cash raising exercise.

rFirecrest, the Internet group, needs to find new advisers to retain its quote. Banker Singer & Friedlander and broker Collins Stewart are quitting and Firecrest has until early next month to attract replacements. The shares fell 10p to 50p.