Cash calls and CBI gloom provide pause for thought

MARKET REPORT

Time to take stock of events of an economic nature was the order of the day in London where dealers paid far more attention to the subdued CBI industrial trends survey than the record-breaking overnight performance on Wall Street.

Shares prices were marked lower from the moment the market opened. The FT-SE 100 share index sported a deficit throughout the session, and finished at the day's low point of 3,750.0, down 19.2.

Gloom arising from the CBI survey, and unexpectedly buoyant M4 figures was compounded by a weak opening on Wall Street. The Dow Jones index was off 30 points when London pulled down the shutters for the night.

Volume trading in UK equities was high, although the final tally of almost 753 million shares that changed hands in 38,000 deals would have been considerably lower but for several special situations - notably Granada's victory in the takeover battle for Forte, in which more than 33 million shares alone were traded.

Even a solid raft of takeover rumours failed to inspire investors, whose hopes for a further cut soon in interest rates were dampened considerably by the economic data. Gilts fell immediately after the release of the M4 figures.

The market was in no mood to absorb the two cash calls announced by Farnell and Berkeley Group. Shares in Farnell, which is raising pounds 349m to part- fund the pounds 1.85bn purchase of Premier in the US, returned from suspension and promptly fell 62p to 617p. Berkeley's pounds 73m rights issue led to a 5p fall to 504p.

Few of the 100 leading shares escaped the mark-them-down treatment. Only two of the handful of leaders that did rise managed to finish with double- figure gains. They were National Westminster, up 11p to 668p as rumours of a possible bid for Standard Chartered, down 4p to 619p, subsided; and Rexam, formerly known as Bowater, which advanced 10p to 379p on vague talk of a takeover bid being launched from the other side of the Atlantic.

Takeover speculation injected some spark into the electricity sector. Midlands, ahead 10p to 368p, was the main talking point as rumours intensified that it was in bid talks. The shares are set to run higher today following an after-hours confirmation of an approach. A previous bid for Midlands by PowerGen, off 2p to 516p, is being scrutinised by the Monopolies and Mergers Commission.

The outcome of the Granada battle with forte caused little surprise. And those who were expecting a close finished were soon persuaded otherwise by an early announcement from Mercury Asset Management that it had pledged its 14.1 per cent stake to Granada.

Forte's last day of independence was marked with a 11p rise to 384p. The shares traded at 382p when the 60-day bid clocked stopped ticking at lunchtime. Granada retreated 18p to 678p.

Analysts and dealers busied themselves with thoughts about where the cash element of Granada's bid terms would be re-invested, and which leisure stock would next find itself on the end of a bid.

Ladbroke was marked up 2p to 164p as rumours of a possible bid from Bass, a penny easier to 732p, resurfaced. Whitbread's failure to buy Forte's restaurants was greeted with a 4p fall to 684p.

Whitbread's willingness to show it was prepared to gear up to buy the restaurants has fuelled plenty of speculation about where its acquisitive sights will be targeted next.

Whitbread has 100 fewer pubs than it is allowed under the ceiling imposed by the Beer Orders. Potential targets include Regent Inns, up 29p to 720p, and JD Wetherspoon, ahead 16p to 716p.

Forte's demise was good news for Greenalls. The rapidly-expanding pubs and hotels group is tipped to replace Forte in the FT-SE 100 index. Shares climbed 7p to an all-time high of 604p.

Fears about the possible demise of Fokker, however, overshadowed Rolls- Royce, down 3.5p to 194.5p. The company could lose upwards of pounds 100m of business a year done with Fokker if Daimler-Benz, the planemaker's owner, proceeds with a threat to pull the financial plug.

Rumours about a move by Gehe of Germany to counter Unichem's agreed bid for Lloyds Chemists continued to do the rounds.

Lloyds added 6p to 426p, putting more air between its share price and the value of the cash and share bid from Unichem, off 7p to 246p.

London Clubs, the casino company, had a good session, rising 15p to 459 following an analysts' visit.

TAKING STOCK

r Antofagasta Holdings, the mining and banking group, is causing excitement. Shares, up 60p in the last week, rose 10p to 343p yesterday. The talk is that the Chilean authorities have sanctioned the creation of one of South America's largest banking groups, allowing the Luksic family of Chile, majority shareholders in Antofagasta, to pool its banking interests with Banco Central Hispanoamerica. The deal will create a banking group with $10bn of assets and may result in Antofagasta investors being granted some shares in the new venture.

r Institutional investors are said to be queueing to lift holdings in London Scottish Bank, up 2p to 179p. The liquidity of the stock will improve as the company celebrates its centenary with a one-for-one scrip issue.