Japanese markets fall for a silly season sensation

FORGET THE economic slump and the plunging yen, the Japanese stock exchange is now faced with a much more serious threat: the Press Association news agency.

The British wire service, known as PA, became a household name in Asian financial circles yesterday when it prompted a shutdown of trading in Glaxo Wellcome shares. The story to send the normally unflappable bosses of the Tokyo market scurrying for cover was a short item, which ran on Sunday, suggesting that Glaxo, one of the blue-chips of the Tokyo market, had resumed talks on a pounds 105bn merger with another drug giant, SmithKline Beecham.

Negotiations between the two companies broke down in February amid rumours of a bitter clash of personalities between Glaxo's boss, Sir Richard Sykes, and his SmithKline Beecham counterpart, the former tennis star, Jan Leschly. But according to PA, the deal was being revived. Under the headline: "Glaxo Wellcome merger with SmithKline Beecham back on", the news agency explained that the two were set to merge, although the tie- up would probably be delayed until Mr Leschly's retirement in three years' time.

The two companies denied the story immediately, saying that absolutely nothing had changed since February.

The denials did little to deter the Japanese authorities, who latched on to a translation of the PA story on the Nikkei news wire and ordered the suspension of Glaxo shares for the whole of yesterday's session.

What Tokyo failed to notice was that the PA article was toned down during Sunday, going from "merger back on" to the rather more cautious "merger just a question of time" headline.

The second version of the story, which appeared some four hours after the first article was distinctly more cautious. Cynics even suggested PA was trying to backtrack after having been stung by the two companies' trenchant denials.

PA yesterday refused to comment but commentators suggested that the story was probably amplified by its release on a Sunday during the silly season.

For the record, the Japanese are not alone in giving credit to the story. The London stock exchange seemed also to catch the mood. Traders yesterday sent Glaxo shares 41p higher at 1,908p, with SmithKline up 10p at 693p.