Footsie ends the week in retreat after early advance

MARKET REPORT

The volatility which has been a feature of this year's long bull run was evident again yesterday when Footsie swung between extremes of a near 50-point advance and a 100.7 retreat. It settled at 4,877.2, down 71.8.

New York wrought the damage. Disappointment over Microsoft's second quarter figures and another bout of interest rate worries sent the Dow Jones Average tumbling.

Equities had opened on a firm note with Footsie stretching to within a whisker of 5,000 points. The effort proved too much and even before New York's misery became apparent the blue chip index was in retreat.

The nervous roller-coaster ride was a fitting finale for a week of incredible activity on the stock market. In the first three days Footsie jumped 164.7, falling 87 in the final two.

Yesterday's early Footsie advance was due to manoeuvring ahead of the July futures expiry.

Many of the recent high flyers came crashing nearer earth. HSBC, where a 2,500p target price was nailed to the shares this week, fell 87.5p to 2,090p. Abbey National and Standard Chartered were others experiencing double digit falls.

National Westminster Bank had to contend with the failure of any Prudential Corporation bid to materialise. The shares fell 26p to 866.5p. The Pru dropped 28p to 586p, perhaps indicating a lingering suspicion that, if not NatWest, it has a spectacular strike in its sights.

Royal Bank of Scotland lost 8.5p to 636p, with Charterhouse Tilney suggesting the shares could go to 750p. It says the profit outlook is improving at the Direct Line insurance business and the Citizens operation in the US; group profits should advance by nearly pounds 100m to pounds 740m this year.

Royal & Sun Alliance, the insurer, rose 8.5p to 497p as SBC Warburg described the shares as a "trading buy".

Two food shares took the blue chip honours. Associated British Foods edged ahead 13.5p to 557.5p and Asda, the superstores chain, rose 3.5p to 147.5p, highest since chairman Archie Norman arrived in the early 1990s to rescue the then ailing group. Trading was heavy with Seaq turnover put at 43.8 million shares. Merrill Lynch was thought to have led the buying charge, creating in some quarters suggestions of corporate action.

Tomkins, the conglomerate which delighted the market when it decided to indulge in a share buy-back, moved to a 12-month high with a 6.5p gain to 298p.

The buns to guns group had set its face against handing cash back to shareholders, preferring to hoard its riches for acquisitions. Last week came the change of mind with pounds 100m of its pounds 250m excess money earmarked for share buying.

Imperial Chemical Industries ended 1.5p higher (after 11.5p) at 922.5p. The transformed chemical group plans a $4bn fund-raising to reshape its borrowings. Interim figures are due next week with profits expected to be sharply lower at pounds 160m.

BT remained in a sorry state, off 10.5p to 430p as the scrambling and scurrying to sort out arbitrage positions following the MCI fiasco continued to undermine sentiment. Before MCI's shock profit warning BT was riding at 501.5p with speculators playing between BT and MCI shares. Many have been left cruelly exposed by the BT reaction.

Telephone hopeful Ionica, trading in its when-issued form, touched 435p despite arriving as the market took fright. The shares closed at a higher- than-expected 421p.

Barr & Wallace Arnold motored 34p to 343.5p after declaring a 120p special dividend following the signalled pounds 41.8m sale of its leisure division.

The remainder of the group, Ford, Peugeot and Vauxhall dealerships, may make further special payments.

SkyePharma ended 3p off at 73.5p. At one time the shares were down 11p. Delays in the development of new drugs are behind the weakness.

Bruntcliffe Aggregates added 4p to 36.5p after admitting a bid could be on the way. Aggregate Industries has 23 per cent and can go to 27 per cent. Bodfari (Quarries), an unquoted Welsh group, has been a persistent buyer and has approaching 10 per cent. The group is valued at nearly pounds 20m.

Engineer Norman Hay hardened 2p to 35.5p as it sold its 7.2-acre Heathrow site for pounds 7m; the property had a book value of pounds 5.7m.

Chepstow Race Course, a narrowly traded share, was the day's outstanding runner, racing away from its 12-month low to achieve an 86 per cent gain to 1,225p. In January the shares hit 1,425p.