Market Report: Shareholders head for exit as BT rings wrong number

IT WAS a busy line for BT shares as institutional and private shareholders took the opportunity to sell.

The fully-paid shares fell 8p to 376.5p and the partly-paid 8.5p to 258p. Both are bumping along at their lowest levels of the year.

The weakness in BT is unlikely to encourage the hordes of private investors who rushed for the BT3 share sale last year to welcome the final instalment of up to 120p a share. Indeed, it could encourage many to sell ahead of the October deadline.

BT, one of the largest FT-SE 100 constituents, has been ringing the wrong stock market numbers since the shares peaked at 486.5p in December.

Tougher competition and worries about the increasingly suffocating impact of regulatory restrictions have taken their toll.

And BT's abject failure to create the hoped-for inroads into the US and elsewhere have also eroded sentiment.

The latest BT setback occurred as another privatisation issue, British Gas, offered its shareholders a sad tale of non-performance. After Richard Giordano, chairman, had warned of a first-quarter profit standstill and lower year's figures the shares slumped 15p to 280p, a year's low.

British Gas has suffered even more from its regulatory eagles than the rest of the privatisation herd. The Giordano comments confirmed the Whitehall-inflicted wounds were deepening.

With British Gas unsettling other privatisation shares and New York surprising many with a ragged display, the FT-SE 100 index swung from a 17.3-point gain to a 20.1 fall at 3,129.9 in occasionally brisk trading.

But the second-string FT-SE 250 index managed to hold a gain, ending 3.5 up at 3,797.4.

Government stocks followed the equity reverse, giving up early gains of up to pounds 1/2 to end up to pounds 5/8 weaker.

In such an atmosphere it was left to special situation shares to make the running. But Lasmo, again in the thick of the action, fell 5.5p to 157p as the signalled Enterprise Oil offer came in at, some calculated, a share price of, in effect, 137p.

Trading was again heavy with Seaq putting turnover at 22 million shares and 15 million nil-paid rights, off 4.5p to 53p. Enterprise dipped 21p to 424p. Other oils were weak. The market confidently awaits a higher counter- offer.

Two of the long-standing takeover favourites managed to cling to gains - Fisons up 2p to 157p and Racal Electronics 3p higher at 239p. United Biscuits closed unchanged at 359p.

The drip, drip of cash calls continued with Airtours, the holiday group, seeking pounds 82m to fund the signalled acquisition of SAS Leisure and a cruise liner.

The shares fell 24p to 424p.

Two newcomers managed to resist the swing. Superscrape VR, a desktop computer virtual reality group, soared to 269p, settling at 261p. The shares were placed at 198p. Oxford Molecular, offered at 80p, touched 87.5p, ending at 84p.

Reed Intenational, the publishing group, held a 12p gain at 837p after NatWest Securities made bullish noises following a meeting with the company.

Vickers, despite Smith New Court support, succumbed to a cautious statement, ending unchanged at 199p. Rolls-Royce, partly on the Defence white paper but still reflecting the recent strong United Technologies results, made further headway, up 4p to 203p.

British Airways' additional French flights lifted the shares 8p higher to 428p but P&O, still fretting about a rumoured downgrading, drifted 4p lower to 711p.

Gerrard & National's decision to abandon the crowded world of gilt market-making left the shares 39p higher at 448p. It is buying full control of the GNI derivatives operation.

Drugs displayed a firmer trend. Glaxo Holdings edged ahead 5p to 569p as it started new US infringement proceedings to defend its Zantac ulcer drug. British Bio- Technology gained 26p to 411p as trials got under way for a new cancer product.

Insurances were down but United Friendly shrugged aside the weakness, gaining 20p to 535p as NatWest made positive comments.

City of London PR put on 7p to 83p. It has added to its market research side by buying the Centre for Research at Islington.

Eidos, a computer editing group, continued its run, reaching 238p, up 15p.

Bakyrchik Gold, with a mine in Kazakhstan, improved 18p to 340p following the Williams de Broe comment that the shares should trade around 850p.

Buckingham International, the struggling hotel group, fell 1.5p to 4p after it announced losses had surged to pounds 96m.

VTR, providing facilities for TV commercials, jumped 20p to 166p following its pounds 2.95m cash call and planned move from the USM to the main market.

The FT-SE 100 index ended 20.1 points down at 3,129.9 but the FT-SE 250 index held a 3.5 gain at 3,797.4. Turnover was 756.5 million shares with 26,406 bargains. The account ends on 13 May with settlement on 23 May.

Pelican, the fast-growing restaurants chain run by Roger Myers, is believed to be on the verge of clinching the takeover of most of the 15-strong chain of Dome restaurant/bars that Forte has been keen to sell for some time. It is thought Pelican will pay between pounds 10m and pounds 12m in a deal that could involve a cash call to shareholders. Pelican shares held at 91p.

Action is expected at RJB Mining, one of the coal groups picking over the old British Coal spread of colleries. Richard Budge, chief executive, has made no secret of his plan to develop a British mines network. RJB shares held at 365p. They came to the market in June last year at 250p. It was a subdued flotation and the shares started life at 229p.