Market report: Bewitched by Wall Street, Footsie breaks new barrier

For the first time Footsie crossed 4,300 points. In a record-breaking session blue chips were in ebullient form, with New York providing the inspiration.

Ahead of the US job figures, which have so often left the stock market in disarray, shares were confidently edging forward. Then the payroll numbers came in at an acceptable level and the Dow Jones Average romped ahead, pulling Footsie higher on its coat-tails.

At the close the blue chip index was up 41.9 points at 4,307.8. It started 1997 at 4,118.5. Government stocks scored gains of around pounds 1.75.

Supporting shares were at best on the edge of the party. It was very much a blue chips celebration with second and third-liners often left clutching at straws.

Although many observers believe the market is not overvalued there is some disquiet over its inability to chart its own course. It often seems bewitched by Wall Street, unable to make up its own mind.

The US influence is, of course, more pronounced among blue chips, which could suggest there is considerable fragility in the market advance.

Financials were again leading by example. This week's flurry of takeover action has given the more inventive minds the opportunity to let their imaginations run riot.

Many long forgotten rumours have been dusted down and given a new lease of life. One involves Barclays, the banking group, hiving off its securities side; the shares rose 15.5p to 1,169p.

Bank of Scotland, on bid talk, was the best performing blue chip, gaining 17p to 361p. Schroders, the merchant bank, jumped 62.5p to 1,752.5p and fund manager Mercury Asset Management 43p to 1,356p.

Insurances enjoyed another strong session with talk of overseas strikes mingling with suggestions of defensive unions. BAT Industries, largely reflecting its financial side, gained 23.5p to 515p and General Accident and Commercial Union were again on the uproad.

Supermarkets, however, were on the bread line. A profit warning from Safeway, one of the big four, did the damage. Its shares plunged 27p to 262p; J Sainsbury found a new 12-month low, off 7.5p to 321p and Tesco lost 18.5p to 344.5p.

Asda had the additional drag of issuing 78.5 million shares following a bond conversion. It fell 6.25p to 114.75p.

Drug shares were on a high. SmithKline Beecham and Zeneca recaptured a little of their takeover appeal. Zeneca, up 25.5p to 1,746.5p, was given a pounds 20 price target by Credit Lyonnais Laing and pounds 19.50 by Merrill Lynch.

But the star drug performer was Celltech, up 63p to 661.5p. A placing by Lehman Brothers did the trick. The US securities house sold 3.9 per cent of the capital to institutions; the deals seem to have been struck at prices around 660p.

Cable and Wireless held at 475.5p as the plug was pulled on its German expansion with Veba which, surprisingly, is hanging on to its 10.4 per cent interest in Cable, saying it is "entirely happy with the performance of its investment".

Logica, the computer group, was under the weather as NatWest Securities lowered its stance to reduce. The investment house say many UK software groups are now trading at a premium to their US counterparts despite similar growth prospects. And NatWest does not believe the year 2000 and the possible advent of EMU will create the sort of computer boom many market watchers are forecasting.

Boots enjoyed a stockbroker change of attitude, gaining 21p to 684p as BZW moved to buy from hold.

Penna, the recruitment group, ended 2p higher at 111p. At one time the shares were off 13p, prompting the company to say it knew of no reason for the decline and trading was in line with expectations.

Newcomer C&B Publishing, placed at 110p, ended at 165p. IMS, a telephone services group which arrived on Thursday, held at 170.5p from its 135p placing.

Investment group Mountcashel, after a cautious statement, fell 7p to 105p.

Roxboro, the electrical equipment group, put on 4p to 186.5p. It has had a difficult few months with two profit warnings and then the departure from its share register of TT, the mini-conglomerate, which had been seen as a possible predator.

Analysts have visited the group's US offshoot and at least two of them have produced buy circulars. HSBC James Capel believes the shares are in "for a marked period of outperformance" and CLL has put forward a target of 225p.