Blue chips modest, but second-liners show their strength

MARKET REPORT

Blue chips may be ducking and diving and going nowhere very fast but second-liners are displaying a clean set of heels.

As the 100 shares which make up the FT-SE blue chips index managed modest headway the next 250 shares - constituents of the second-line index - put on another robust display, hitting another peak of 4,297.4 points with a 15.2 gain.

This yawning gap between the two indices is seen as further evidence that, at least at present, the London market offers two unrelated experiences.

The 100 blue chips are victims of interest rates and New York, while the 250 shares are viewed as offering a much more representative view of the UK economy, illustrating the revival in building and engineering shares as well as the new speculative strength of the utilities.

Second-liners for long lagged behind blue chips - but they have more than made up for their reticence in the past few weeks, hitting six peaks this month while the blue chip index has, at best, drifted. And it was their turn to catch the eye once again yesterday.

Wassall, the conglomerate, gained 23p to 310p, reflecting figures; South West Water spurted 44p to 659p as Severn Trent jostled with Wessex Water to mount a bid.

Northern Foods, which has for long been in the doldrums, drew strength from its involvement in meats, other than beef, and bullish comments from Mees Pierson's John Marshall who is shooting for an uninspiring pounds 121m this year and looking for pounds 134m next. The shares gained 10p to 204p.

The BSE sufferers were Sims Food, off 9p at 22p, and Whitchurch, headed by former Hard Rock Cafe chief Barry Cox, down 6p at 40p. Grand Metropolitan, the Burger King group, gained 5p to 434p. Electrophoretics, which is developing a system for quickly detecting BSE from blood samples, jumped 17p to 152p.

Guinness responded to flat figures with a 11.5p fall to 460.5p and, in a thin market, Young's Brewery enjoyed a rare ferment with the voting shares up 37p to 550p and the non voters 35p higher at 503p. Guinness Peat, the financial group run by New Zealand entrepreneur Sir Ron Brierley, is stake building.

Austin Reed edged ahead another 2p to 234p on expectations of corporate action while Nurdin & Peacock - the cash and carry group where SHV, the Dutch investment group is hovering - held at 156p.

Lucas Industries, soon to lose chief executive George Simpson to GEC, motored 7p to 209p, equal its year's high. Since it became clear that Mr Simpson was off to meet fresh challenges the shares have drawn support on the view that Lucas is vulnerable to a take over strike. The shares were down to 172p in December.

Thames Water jumped 17p to 575p on its reorganisation and WH Smith, on renewed take over speculation, gained 13p to 437p.

Drug shares enjoyed a late run as SBC Warburg produced a basket warrant on the sector. SmithKline Beecham gained 28p to 684p. Glaxo Wellcome, helped by upbeat data on a genital herpes treatment, ended 14p to the good at 819p.

Flare, the Ian Gowrie-Smith industrial vehicle announced the expected acquisitions and a cash call, ending the day 6p higher at 181p.

MAID, the information group, managed a 2p gain to 228p. Easynet, an internet service provider where MAID has 15 per cent, has delayed its market debut until Wednesday.

Fulmar, a high tech commercial printer, moved from a 154p placing to close at 186p; Triad, a computer group floated at 135p reached 178p. Silver Shield, a windscreen group which attracted a 60 million turnover, moved 0.75p from its placing price to 3.75p.

VossNet, a computer group traded on AIM, surged 153p to 413p as a possible US take over materialised. Its main shareholder, with 52.97 per cent of the capital, has conditionally accepted an offer of 130p cash and 350p in redeemable shares in the bidder, a company called Petra.

Stanford Rook, the TB treatment group, surged 70p to a 580p peak on an encouraging statement. Lloyds Chemists was firm at 472p; The European Commission is expected to decide today whether to investigate the bids from Gehe of Germany and UniChem or pass the issue back to the UK.

Rodime, which is little more than a litigation play, more than doubled to 4.25p. This once-proud pioneer of computer disk technology has undertaken a restructuring to allow it to continue pursuing its claim against Seagate, another pioneer which has grown into one of the world's leading disk drive makers.

TAKING STOCK

oBruntcliffe Aggregates shaded to 27p on profits, hit by litigation charges, of pounds 1.4m against pounds 1.6m. Around pounds 2.2m seems likely this year. Anthony Hanson and Paul Kaye (former directors) and friends have 27 per cent plus loan stock convertible into 3.5 per cent. Their intentions are unclear.

oMid States, a US car parts distributor where profits are under pressure held at 40p. Botton International has built a 14.3 per cent stake, behind which stands the Irish entrepreneur Dermot Desmond, who acquired London City Airport for a knockdown pounds 14.5m last year.

oPhoenix Timber, a property preservation group, has enjoyed a romp since it announced a pounds 2.2m cash call. The shares, 18p at the time, gained 3p to 29p.

DATA BANK

FT-SE 100 3698.3 +12.9

FT-SE 250 4297.4 +15.2

FT-SE 350 1860.5 +6.5

SEAQ VOLUME 842m shares, 40,076 bargains

Gilts Index 92.66 +0.21