Market Report: Footsie advances but oil groups suffer

EQUITIES RETAINED their new summertime glow. Tuesday's heroic surge should have been followed by at least a gentle bout of consolidation. Yet Footsie, although closing below it day's high, managed a 46.1 points gain to 5,694.3.

But for Enterprise Oil and Lasmo it was another downbeat session, bringing even closer the possibility they will be relegated from Footsie. If they are removed it will leave only the giants, British Petroleum and Shell, to represent the oil industry in the daily Footsie calculation.

Footsie's next composition meeting is due next month. On present form Lasmo is a sure fire casualty and Enterprise has little room for manoeuvre. Others fighting the drop include Smiths Industries and the last recruit the RMC building materials group.

Smiths was recently the subject of some rogue order-driven trades. It pointed out that had they occurred on the Footsie reckoning day its place in the index would have been lost.

Enterprise was one of the worst performing Footsie constituents, falling 12p to 435p; Lasmo lost 3p to 196.5p. The oil industry is suffering from the collapse in bulk oil prices which could fall even more if, as some suspect, the Russians step up production as part of its bid to earn much needed revenue.

British Airways, on the promise it would defy the Eurocrats over its London airports slots, if domestic regulators offered support, rose 30p to 518p. The Airline wants to sell 267 Heathrow and Gatwick slots but Brussels wants to give them away. UK regulators favour a sale.

Vodafone, making investment presentations, dialled a 43.5p gain to 860p and HSBC, as the Hong Kong market reaped the benefit of more Government support, rose 46p to 1,369p.

At one time Footsie was up 64.6. It was buoyed by Hong Kong's advance, a firmer display in Tokyo and New York's overnight performance.

The mid-cap index edged ahead and even the small cap, which had looked in terminal decline, managed to record a modest gain.

Rentokil, off 14p, at 365p, was hit by its unexpected failure to keep up its 20 per cent growth rate and National Power fell 21p to 559p as bid hopes faded. But PowerGen, on switching out of NP, hardened 31p to 780p.

Computer shares were in demand, thanks to the Micro Focus profits leap. Misys rose 110p to 2,730p and Sage 67.5p to 1,432.5p. Micro Focus added 17.5p to 480p.

The cream came off milk shares. Milk Marque, the industry regulator, is set to make a City presentation next week. Before then it is likely to slash wholesale milk prices, eroding the margins of the dairies. Unigate fell 22p to 542.5p; Express 13.5p to 133p but Robert Wiseman held at 191.5p.

Northern Foods firmed to 182.5p as Merrill Lynch duly produced its buy recommendation.

WS Atkins, the consultancy, hardened 30p to 665p, a shade from its peak. Merrill Lynch is less enthusiastic on short-term prospects but remains keen on the longer view. It expects profits of pounds 34.5m this year and pounds 37.7m next.

Beers were weak after Deutsche Morgan Grenfell took a distinctly sober view of the industry. Even so Bass, one to attract a DMG downgrade, rose 35p to 975p. Whitbread, another target, fell 2p to 838p.

BAT Industries shaded to 680.5p. Panmure Gordon is positive, believing the shares have enough puff to reach 800p. It is encouraged following the reshaping and suggests the shares have what amounts to a "junk bond" rating. Imperial Tobacco was hit by Charterhouse Tilney taking the shares off its buy list, falling 23p to 526.5p.

Imperial Chemical Industries, the subject of an early morning rogue trade, ended little changed at 690p although a profit warning by its German rival, Hoechst, ruffled sentiment. Zeneca, ICI's former subsidiary, improved 70p to 2,410p as Roche take over speculation continued.

Billiton, the mining group, hardened to 126.5p. Dresdner Kleinwort Benson upgraded its net income forecasts on the back of currency considerations. The investment house is still thought to have up to 40 million shares on its books, currently showing a loss of pounds 16m. It took 101 million shares from one of Billiton's major shareholders, a South African mutual called Sanlam. It has, it is thought, placed 60 million.

Henlys, battling for Dennis, shaded 4p to 501p as Volvo lifted its stake to 6.82 per cent.

Holiday shares were ruffled by planned capacity cut backs next summer. Airtours fell 15.5p to 391.5p and First Choice 8p to 123.5p. Thomson lost 2.5p to 159p.

Alexanders, the garage group, reversed as bid talks ended. The voting shares fell 4.5p to 13p and the non voters 4.5p to 12.5p.

But the prospect of bid action at Brooke Industrial, an engineer, prompted a 24p advance to 130p.

Petra Diamond resisted a bear raid, ending 1p higher at 117p although its warrants dropped 7.5p to 87.5p. Waverley Mining, where bid talks have been abandoned, fell 0.5p to 7.5p.

SEAQ VOLUME: 804.2m

SEAQ TRADES: 57,712

GILTS INDEX: WS Atkins

ANOTHER BUY note on John Lusty, the food group. Collins Stewart expects profits to climb from pounds 1.9m to pounds 3.6m this year and then reach pounds 4.2m.

The note describes the company as "a highly cash generative, defensive growth stock which is well placed to take advantage of the fragmented and lucrative specialist food market". The shares, at 10p, trade at a 50 per cent discount to the market and 40 per cent to its nearest competitor, WT Foods.

MINMET, traded on the Irish exploration market, firmed 0.75p to 9p.

Its 78 per cent-owned Crediton Minerals (CM) subsidiary could be edging nearer to a Devon gold strike: a survey indicates a structure "that could lead to the discovery of further high-grade gold" in an area known as the Crediton Trough. A new drilling programme is to be carried out. CM is traded on the fringe Ofex at 21.5p.