Market Report: National Power generates a warm glow for punters

National Power, free from the inhibiting influence of its final call, was a leading player as blue chips surged to another peak. The shares glowed 14p higher to 396.5p, following a long period of decline. Its smaller rival, PowerGen, gained 10p to 493.5p.

The generators were on the high wire as the FT-SE 100 index stretched to 3,967.9, a 35.3-point gain. Its rampant form indicated the tantalising 4,000-point barrier would fall next week.

New York, hitting new peaks, was an important influence with the latest Washington statistics easing the pressure for an interest rate increase. Government stocks scored gains of more than pounds 1, their best performance for weeks.

Trading levels remained uninspiring and the market is still squeezy. The second-line index, up 21 to 4,453.3, is still more than 100 points from its peak, hit in April.

NP has been under the whip since takeover hopes, which took the shares to 605p, were killed in the spring. Then its 100p special dividend had to be extracted and the shares, with the final call weighing heavily on sentiment and prompting a run of small selling, fell to 375p.

PG, which has failed to produce a 100p extravaganza, topped 600p in April. In recent weeks it, too, felt the impact of partly-paid shares becoming full-paid.

As the Iraqi stand-off rumbled on, oil shares continued to make headway with British Petroleum hitting a 655.5p peak, up 8p. Defence shares also felt the Iraqi tension with Rolls-Royce climbing 8p to 243p, British Aerospace 12.5p to 1,062.5p and Vickers 9.5p to 275p. LucasVarity gained 8p to 248p, helped by stories it intended to sell its aerospace side to Pratt & Whitney, the US giant.

Tomkins, enjoyed an upbeat trading statement, putting on 9p to 272p and Inchcape, figures soon, improved 7p to 303.5p. A 16.2 per cent advance in western European car sales also helped sentiment.

Superstores missed the fun. The latest round of price cutting, nothing more than the traditional autumn positioning ahead of the Christmas price promotions, unsettled the market and prompted price cuts on the share front.

Tesco, leading the present charge, fell 5p to 306p and J Sainsbury lost 4p to 382.5p. Asda was little changed at 108p and Safeway lost 3.5p to 334p.

Matthew Clark's three-day free-fall came to an end with a 21.5p recovery to 365p. Suggestions Guinness could be interested in the hard-hit cider maker helped the token rally. Whitbread fell 6p to 700p as Salomon Brothers advised a switch into Scottish & Newcastle. Tom Cobleigh, the pubs chain, jumped 24p to 236.5p after confirming takeover talks were under way. The group's biggest shareholder, a venture capitalist, has declared its intention to sell its stake.

Courtaulds, up 10.5p to 469.5p, responded to a Barclays de Zoete Wedd buy recommendation. Unilever, the Anglo Dutch giant, continued to benefit from its US investment presentation. Disappointing figures from Nestle, the Swiss giant, could prompt caution to creep into Unilever forecasts. The shares rose 13p to 1,386p.

The arrival of newspaperman Andrew Knight at Home Counties Newspapers prompted an 18.5p gain to 367.5p. Berisford, the old commodities group now deep into bathrooms and kitchens, struggled to stay above its year's low as the market fretted about industrial problems. The price lost 8p to 150.5p.

St Ives, the printer, jumped 23p to 457.5p; Merrill Lynch and ABN Amro Hoare Govett made bullish comments.

Pan Andean Resources put on 14.5p to 124.5p as the drilling at its Bolivian field moved into the final stage and JKX Oil & Gas was 4.5p firmer at 134p although the Deutche Morgan Grenfell share sale threat still lingers.

British Biotech, off 8p at 192.5p, caught the DMG complaint. The bank's unit trusts have a significant stake in the biotech group, which reports results next week. Stanford Rook was another drugs group feeling the strain, off 32.5p to 367.5p.

Omnicare, the healthcare group, held at 110p. Stockbroker Astaire & Co is enthusiastic. Analyst Charles Hunter says the company is "well advanced in marketing its integrated home healthcare solution". He sees profits at pounds 1.8m next year.

Gibbon, the printing ink group, held at 125p as chairman Michael Gibbon picked up 50,000 shares, taking his interest to 10.1 per cent. Easynet's decline continued, down 4p to 38.5p. It is due to produce figures on Monday.