Yorkshire Electricity turns on investors as bid target

MARKET REPORT

As shares surged triumphantly to yet another peak the stock market was buzzing with rumours that a big takeover bid would materialise early next week.

Yorkshire Electricity emerged as the favourite target. Its shares jumped 16p to 752p in, for what is normally a relatively quiet share, busy trading.

Rumours of an electricity strike have swirled this week as stories have circulated a bid package was being put together for one of the regional electricity companies.

US and Continental groups are known to be interested in building a powerful presence in the electricity industry and many of the remaining players are on permanent bid alert.

It is widely believed the surviving Recs have little chance of retaining their independence for much longer.

The record-breaking display pushed the FT-SE 100 index 28.5 points higher to 3,781.3. The 3,800 barrier should be topped in the next few days and there is confident talk of the index reaching 4,000 by the half-year. The supporting FT-SE 250 index also stretched to a peak.

Hopes of lower interest rates, a more settled feeling about company profits and the prediction of more bid activity fuelled the upsurge.

For once, even an uncertain performance by New York during London trading failed to have much impact.

A determined bear raid on Zeneca, the drugs group, took some of the gloss from the proceedings. As rumours swirled Zeneca, up 10p, quickly crashed 70p to 1,216p. The buzz was the group had run into problems with either the UK or US authorities with its asthma drug, Accolate.

It is known Zeneca has been asked for more information about Accolate but it is not aware of any regulatory difficulties. "There have been no recent developments," said the company and the shares recovered much of their fall, ending at 1,245p, off 31p.

Even so, for a time it was pandemonium with many market-makers caught short and forced to scramble to cover their positions. In panic trading turnover, according to Seaq, topped 4 million.

At the beginning of the year Zeneca was asked by the UK's Committee on the Safety of Medicines for more information about Accolate. Since then it has been in continuous touch with the regulatory body; there had, it said, been no further developments in the US Food & Drug Administration's approval procedure.

Even so the raid probably produced rich rewards for the perpetrators with some shareholders panicked into selling. It demonstrated again the fragility of the drugs sector.

The bear raid was perfectly timed - towards the close of trading on a Friday with many of the market's leading lights already heading home. And with Celltech forced to withdraw its asthma drug this week the market was already twitchy about drugs in general and asthma drugs in particular.

Zeneca was for long one of the market's favourite takeover candidates and its shares were near their peak ahead of the wounding raid.

Other drugs, particularly bio-babes, were again suffering withdrawal symptoms. Celltech fell a further 43p to 475p; British Biotech 138p to 1,975p; Proteus 15p to 71p and Stanford Rook 23p to 410p.

Supermarkets were also under pressure as more downgradings appeared and J Sains- bury stepped up the price war.

Besides Yorkshire Electric, a clutch of other shares caught the takeover bug. Standard Chartered, on National Westminster Bank's informal approach, bounded 18.5p to 649.5p. Ladbroke, as Bass bid rumours re-appeared, galloped 12p to 181p and, in an active broadcasting sector, Yorkshire & Tyne Tees Television rose 9p to 815p.

The strong gold price sent RTZ 35p higher to 951p and Bakyrchik 45p to 490p. Mercury World Mining, the investment trust which is the favoured gold play of many institutions, rose 6.5p to 109p, a 12-month high.

Dixons gained 6p to 420p. Mees Pierson expects profits of pounds 136m for this year and pounds 166m next. Its target price is 500p.

Rolls-Royce flew 4.5p higher to 213p on the expectation of more engine orders and a proposed joint venture with Singapore Airlines. Textile group Dawson International dropped 14p to 97p following a profits warning.

The approaching music and rental split spun Thorn EMI 34p better to 1,707p.

National Grid eased to 203p as UBS placed 30 million shares at 201p. WH Smith, another busily traded, shaded to 414p as a pension fund sold.

Bruntcliffe Aggregates held at 27p. Two former directors have lifted their stake.

TAKING STOCK

r Trafficmaster, providing live traffic information, is coming out of the red and should drive to profits of pounds 1m this year with pounds 5.7m likely next, believes Greig Middleton. It expects a 1.5p dividend followed by 3p. The shares are 309p.

r IES, the security systems group, rose 10p to 620p on the Ofex market. It is handing round a two-for-one share bonus and plans to move to the Alternative Investment Market at the end of this month. Nuclear Electric is the latest to link with IES - it is testing its fire detection system.

r Expect action soon at Kenmare Resources, the exploration group. The shares rose 1.25p to 27.5p as stories went the rounds it could soon be involved in corporate action.