Market Report: National Westminster results boost sector

John Shepherd
Tuesday 03 August 1993 23:02

THE banking sector commanded a large part of the market's attention yesterday, a day that was otherwise becalmed by a return, albeit uneasy, to more orderly proceedings on foreign exchanges.

National Westminster Bank's interim results were well received. The increase in pre-tax profits from pounds 211m to pounds 21m was at the top end of forecasts, but the increase in the interim dividend from 6.125p to 6.4p caused most surprise, with many analysts expecting no change.

There was also some relief that NatWest did not wade in with a rumoured rights issue.

Flemings has slightly upgraded its full-year forecast to pounds 1.2bn, and remains a buyer of NatWest, which closed 13p higher at 510p. Share turnover was brisk at 11 million.

The results had a knock-on effect on Barclays, which advanced to a high for the year of 499p, up 13p on the day.

However, some caution was expressed about Barclays' own half- year results, due to be released tomorrow. There are expectations in several quarters that the interim dividend will be cut.

Abbey National improved 10p to 402p; HSBC, owner of Midland Bank, finished 14p higher at 671p, but Lloyds could manage only a modest 3p rise to 542p.

The rise in NatWest shares was worth 1.55 points for the FT-SE 100 share index, which fluctuated in a narrow band of plus and minus five points before closing with a small advance of 3.3 at 2,945.

Second-line stocks set another record yesterday, although the

3.1-point increase to 3,338.4 in the

FT-SE 250 was considerably smaller than the rises over the previous three sessions.

Wall Street failed to provide any impetus, opening softer, with economists disappointed at leading indicator figures that supported views that the US economic recovery was very weak.

On paper, London's volume trading looked remarkable at 200,000 short of 800 million, but the underlying picture was starkly different. Of the total, some 186 million shares were turned over in just 10 stocks.

They included 53 million of Bardon Group's nil-paid, which closed at 4p; some 20 million of British Telecommunications partly paid, up 5.25p to 180p; some 16 million ordinary BT, ahead 6p to 424.5p; and 12 million Burton, 3.5p easier at 87p.

Business also received a fillip from a pounds 100m buying and selling spree by UBS on behalf of a single client.

Gold shares, strong of late, retreated on fears of a fall in the bullion price, which has traded above dollars 400 an ounce since the middle of last week. 'The market's discounting a dollars 7 to dollars 8 drop in the price of gold,' one dealer said.

There was a muted response in the equity market when the price started to climb last week. The consensus was that it would meet resistance, and the belief now is that it may soon slide back below dollars 400.

Vaal Reefs lost almost pounds 3 to pounds 57.50, Cluff Resources shed 2p to 36.5p, Monarch Resources lost 4p to 181p, Lonrho gave up 3p to 130p, Freegold dipped 32p to 837p, and Harmony dropped 12p to 839p.

Food retailers were easier on concern about Tesco's decision to push cheaper own-label products. Kwik Save slipped 8p to 675p, Sainsbury fell 8p to 479p but Tesco closed 0.5p firmer at 214p.

French Connection, quoted on the USM, soared 22p to 138p. Takeover rumours were quashed by the company and Kleinwort Benson, its financial adviser, which said a price squeeze had been caused by a shortage of stock.

The day's best performer was Kleeneze, which surged 44p to 226p on the launch of the Battery Manager, which the company claims can increase the life of ordinary batteries by 10 times. Sherwood Computer Services, a USM stock, took the wooden spoon. Its shares collapsed 63p to 145p on a profits warning.

Institutional buying lifted Laporte, the chemicals company, by 14p to 620p.

Yorkshire Chemicals, on the other hand, had a rough day and lost 16p to 339p, with the company issuing cautious noises along with its interim figures.

Some analysts, however, felt the market had overreacted, saying the cautious trading statment was more a case of the company being realistic than anything else.

Capita Group firmed another 1p to 163p in early dealings, before settling down with the rest of the market and closing unchanged at 162p.

Credit Lyonnais Laing, the company's broker, says the acquisition of West Wiltshire Software will enhance earnings in 1994. It has raised its profits forecast from pounds 6.5m to pounds 6.7m.

Share prices made small gains yesterday. The FT-SE 100 share index closed 3.3 points higher at 2,945 and the FT-SE 250 rose 3.1 to 3,338.4, its fifth all-time high in as many days. Volume trading was 800 million shares. The account ends on 13 August and settlement is on 23 August.

Last June the venture capital arm of Schroders, the merchant bank, bought 40 million shares in Mitel, equal to 51 per cent of the Canadian telephone equipment maker, for Cdollars 1 a share. Schroders has now sold 10 million of those shares for Cdollars 6.35 each through a syndicate of brokers led by Wood Gundy. Analysts say prospects for Mitel, which recently made its best quarterly profit for 11 years, remain good.

Julian Rawel has resigned as sales and marketing director of Eurocamp, the specialist camping group. He will leave the company on 27 August. Eurocamp recently warned that profits for the full year would fall by 30-35 per cent because UK holidaymakers had stayed away from France, where it operates several sites. Shares in Eurocamp, as high as 350p in the last year, rose by 2p to 186p.

Stagecoach has been boarded by Tim Sainsbury, Minister of State for Trade and Industry, and seen its proposed takeover of Lancaster City Transport re-routed to the Monopolies and Mergers Commission. The minister said the deal raised competition concerns in the bus market in the Lancaster and Morecambe areas. MMC has until 2 November to report. Stagecoach, recently floated, held at 140p.

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