Abbey National soars to a peak as bid talk swirls

MARKET REPORT

Abbey National soared 38.5p to a 957.5p peak as stories swirled that the former building society would soon be hit by a takeover assault.

There was heavy late trading, with one market-maker paying 968p for 10,000 shares, as the stock market latched on to stories of a strike from the HSBC banking giant or from BAT Industries at 1,250p a share.

The shares were strong throughout the session but seemed to lose some of their enthusiasm as the market started to wind down. Then, in the final flurry, the price shot ahead from 935p.

Abbey has been a major beneficiary of the stampede into financial shares. In recent months it has climbed from 700p.

Although regarded these days as a bank it is, in conventional trading terms, still very much a building society operation and would make a snug fit with a group like HSBC, owner of Midland Bank.

But even HSBC might balk at the cost; Abbey's capitalisation is already pounds 13.5bn and at 1,250p would command pounds 17.6bn.

Footsie ended 21.4 higher at 4,691 points, another peak. For much of the session it was for the first time riding above 4,700 - touching 4,720.3.

The Bank of England's forecast of higher interest rates in the next few months and then New York's early inability to build on its overnight record run rubbed the shine from the proceedings.

Even so it was a busy session with buyers keeping their noses in front.

The giant Grand Metropolitan/Guinness merger continued to reverberate around the market with a host of major companies singled out for attention. Allied Domecq, with results a little ahead of expectations, bubbled 17p higher to 463.5p as the feeling grew that it would be forced to link with another group.

Cadbury Schweppes and Reckitt & Colman were others in the grip of the brand merger mania.

But GrandMet fell 18p to 584.5p and Guinness 16p to 575.5p.

Drugs were on a high. At one time SmithKline Beecham was up 64p, settling 22p stronger at 1,064p. Takeover talk, a couple of investment presentations with more to come and a shortage of stock created the excitement.

Cortecs International's "positive results" from osteoporosis drug trials lifted the shares 25p to 268.5p; the Chiroscience study of a new asthma treatment lowered the shares 15p to 316p. Celltech, expected to produce a favourable report this month for its septic shock treatment, slipped 27.5p to 622.5p.

Abbey was not the only financial to draw strength. Royal Bank of Scotland, getting closer to Scottish Widows, gained 25.5p to 649.5p and Mercury Asset Management rose 40p to 1,446.5p. Some of the recent high-flying financials lost some of their appeal.

Oils had a strong session as the crude price firmed; Cairn Energy also gushed on talk that its Bangladesh venture with Shell had been upgraded and an analysts' visit was getting under way. Alliance Resources, which returned to market at 60p against an 80p suspension price two weeks ago, continued to weaken, falling 3.5p to 31.5p. Bula Resources lost 0.25p to 1.75p.

Utilities were generally higher with Thames Water 9.5p up at 688.5p.

BTR, still unsettled by last week's profit warning, was heavily traded, falling a further 5.5p to 213.5p. Sears, with Merrill Lynch said to be dividend shopping for 25 million, edged ahead 1.5p to 78p and De La Rue, the security printer, lost 7p to 527.5p, with Merrill said to be trying to place 10 million at 510p.

Christie's International, the auctioneer where Bahamas-based entrepreneurial investor Joseph Lewis is a persistent buyer, put on 19p to 322.5p and Cordiant welcomed the arrival of Prince Alwaleed with a 1.5p gain to 129.5p. The Saudi Prince, with a string of high-profile investments, has 3 per cent of the advertising agency.

APV, the engineer, firmed to 109p as bidder Siebe built its interest to 9.7 per cent. Siebe rose 16p to 987p.

Hammerson, rumoured to be planning a strike at MEPC, fell 9.5p to 456.5p as BZW placed 16 million shares.

Estate agent John D Wood rose 5.5p to 120p; a takeover approach was revealed after the market closed. Arion Properties, where reverse takeover talks are in progress, gained 5p to 27.5p.

DCS, the computer group, fell 13p to 315.5p. Chief executive Robert Williams sold 325,000 shares at 315p. He now has 4.4 per cent.

Taking Stock

r Capital Radio has captured Russell Scott to run its My Kinda Town restaurant chain. He joins from Harry Ramsden's, the fish and chip restaurants group. Since Capital's surprise swoop on My Kinda Town the market has been concerned about its restaurant management structure. Capital shares, in busy trading, put on 8p to 538.5p. Earlier this month the radio group acquired Virgin Radio for pounds 65m in shares. It paid pounds 57m for My Kinda Town.

r Dealings are due to start today in the latest offering from Crawley, Sussex, stockbroker Ellis & Partners. It is Versalite, a glass and glazing group which offers a system for coloured decorated flat glass through water slide transfers. Ellis placed 36.6 million shares, 25 per cent of the enlarged capital, at 3p.