GRE takes up running as next takeover candidate

MARKET REPORT

Although today's Budget curbed stock market activity shares still managed to reach another peak with a further flurry of takeover speculation an important influence.

GRE, the old Guardian Royal Exchange, emerged as the new front-runner as the market continued its perennial search for the next bid victim.

Insurance shares have been lively in recent months as the feeling has strengthened that the sector will be hit by corporate activity. In recent weeks Legal & General has led the pack but lost some of its enthusiasm, falling 16p to 702p.

Industry worries about its vulnerability have been underlined by L&G's decision to hand out a pounds 160m bonus to policyholders and increase dividend growth. Others are expected to follow its example.

BAT Industries, thought to be seeking to expand its financial side, is regarded as the most likely predator for GRE. It could strike within the next few weeks.

The insurance group rose 5.5p to 264p. Its shares have not attracted quite the attention reserved for L&G and Royal Insurance, but steady buying has taken the price to a new peak.

Schroders, the merchant bank, was another pulled into the limelight by renewed takeover talk. The shares gained 27p to 1,333p with National Westminster Bank, known to be casting around for a financial buy and, therefore, linked with a wide array of possible targets, the name in the frame. The Schroders non-voting shares joined the march, gaining 32p to 1,135p.

Ladbroke continued Friday's late run on hopes of a bid from the Bass brewing group. The shares gained 1.5p to 149.5p with Bass 3p stronger at 692p.

South Wales Electricity sparked 28p to 1,055p, ignoring worries of a Budget windfall tax, as Welsh Water appeared to hover with an pounds 840m offer.

The FT-SE 100 index climbed 25 points to 3,649.0, topping last week's high by 20 points. Genuine investment trading was light with the Budget inevitably discouraging trading. Many price movements were thought to stem from attempts by market-makers to get their books straight before the Chancellor's speech. A 24p, gain by Pearson to 667p was said to be the result of such activity.

Even so, despite the caution, the market is convinced the Chancellor will produce the type of Budget it likes and interest rates are expected to fall, perhaps today.

With New York resolutely breaking records, the view is that shares should continue to make progress with Barclays de Zoete Wedd suggesting Footsie could be around 4,200 by the end of next year. Gilts scored gains of over pounds 1.

BT continued to recover from its year's low. The shares rose 16p to 376.5p, accounting for approaching 6 points of Footsie's gain.

The management shake-up and talk it could buy Cable & Wireless's controlling interest in Hong Kong Telecom or even bid for Cable helped the advance. Cable rose 10p to 462p.

British Gas flared 9.5p to 246.5p on hopes of renegotiated long-term contracts and Vodafone rose 5p to 222p on its world-wide analysts visit.

Amec gained 2p to 98p after Alfred McAlpine, off 19p at 140p, rejected its bid and it turned against Kvaerner's 100p offer. The Norwegians have lifted their Amec stake by 2 per cent to 14 per cent.

Allied Colloids fell 5p to 125p as 7.9 million shares were crossed at 123p. Burton, meeting BZW, rose 2.5p to 124.5p.

Trocadero, running the Piccadilly leisure complex, started life at 43p, closing at 40p. Its former parent, Burford, traded at 101.5p. Sunset & Vine, the television group, returned at 113p with the nil-paid at 14p following the acquisition of a large TV facilities house.

Memory Corporation, which revitalises defunct computer chips, rose 55p to 445p on talk of an Albert E Sharp recommendation.

Devro International gained 4.5p to 237p. The sausage casing maker should announce soon the clearance of its $135m acquisition of Teepak, a US rival.

The deal has been in the air since March, largely awaiting the approval of the US Federal Trade Commission. It is understood the share issue to help finance the deal will be less than originally thought.

Devro should have little trouble increasing Teepak's margins and could improve its European operations through involvement with a Czech Re edible collagen skins maker.

Poor trading left Spring Ram down 7p at 17p and Calderburn, the office furniture manufacturer, 17p lower at 48p.

rManx & Overseas, traded on the JP Jenkins Ofex share market, is attracting increasing attention because of its 30 per cent shareholding in Enterprise, regarded by many as the next Unipalm. Enterprise will provide dial-up access to the Internet from anywhere in the UK at a cost of a local call. It is working with Manx Telecom. M&O, headed by Geoffrey Mandrell, chairman of Macdonald Martin Distilleries, intends to move to AIM next month. Its Ofex price is 31p.

rEuropean Colour rose 3p to 94p, with interim profits up 59 per cent to pounds 1.36m. The market expects more than pounds 3m for the year. The group, which acquired the Dyecoms colour business earlier this year, is casting around for acquisitions in the chemical colour business.