Market Report: Blue chips unmoved by base rate cut fails to

ENTHUSIASM evaporated as the stock market decided it was better to travel than arrive. A base rate cut of half a percentage point, which met most expectations, was quickly absorbed and with questions being asked about the merits of the pounds 48bn Zeneca/Astra merger, Footsie ended with an 8.8-point fall to 5,660.3.

But the rumour mill remained active, still grinding out stories that Siebe will encounter a challenge to its bid to take over struggling BTR, and that ScottishPower's US ambitions could run into opposition.

Siebe is said to be in the sights of an overseas predator, and there are even suggestions that its affair with BTR has a distinct defensive element. Some would no doubt welcome an interventionist strike, as the terms of the engineering merger have not won unanimous support. The fund manager Phillips & Drew, with 10.8 per cent of BTR, is known to be unhappy with them.

BTR shares were little changed at 124.5p although trading was brisk; Siebe, also in active trading, shaded to 224p.

ScottishPower dulled 2p to 827p. Its shares have felt the weight of the market's displeasure over its merger with PacifiCorp, the US utility. They have perked up on talk that the proposed deal will be blown out by a rival offer for PacifiCorp.

Zeneca closed 121p down at 2,590p, just 70p above the price ruling ahead of the merger announcement.

Although lacking the excitement evident earlier this week, the market nevertheless had a busy session with share turnover topping 1 billion. Bed and breakfast deals, often between related funds and aimed at locking in profits, helped to balloon volume.

Footsie swung between a 43.6 gain and a 54.5 fall. A weak New York helped to restrain blue chips. Supporting shares ended moderately higher.

The interest rate cut had the predictable impact on house-builders and retailers. For example Barratt Developments rose 10.5p to 232.5 and Marks & Spencer 12.5p to 418p.

But Harvey Nichols slipped 1.5p to a 116.5p low following disappointing trading comments.

Colt Telecom was again the best performing Footsie constituent, hitting another peak with a 53p gain to 926p. It was one of the companies taking part in a telecom conference hosted by Lehman Brothers.

TeleWest Communications was another telecom share to move ahead, ringing a 6.5p gain to 151.5p after an investment presentation.

Orange managed to firm 8p to 616p despite bearish comments from HSBC, which increased its loss estimates from pounds 86m to pounds 186m and from break-even to a pounds 123m deficit.

Energis jumped 60p to 1,292.5p on a mixture of takeover rumours and support from Morgan Stanley, which upgraded its target price to 1,600p. The investment house also lifted its National Grid target from 540p to 620p; the shares rose 14.5p to 505.5p.

EMI was in a spin, off 6p to 368p, after ABN Amro suggested a 30 per cent dividend cut, and cautious comments from Credit Lyonnais left the mortgage bank Alliance & Leicester 13p off at 8839p. Northern Rock slipped 10p to 550p as BT Alex.Brown trimmed its profit hopes.

The Shell oil giant dipped 7.25p to 354.75p following management changes. It meets analysts on Monday. Lehman remains cautious "until we see the adoption of realistic targets and action on under-performing assets".

P&O, the shipping group, slipped 15p to 697p after its proposed Bovis sale to WS Atkins was called off; Atkins rose 77.5p to 532.5p. Railtrack continued to suffer from Wednesday's regulatory strictures, falling 40p to 1,417p.

BICC, the cable and construction group, firmed to 62p as aggressive Wassall lifted its stake to 9.1 per cent. The packaging group Norcor added 1p to 50p after its rival Linpac again increased its shareholding; it now has 21.84 per cent.

Independent Insurance remained firm, up a further 6.5p to 253.5p. It is though to be eyeing parts of GRE, the Guardian Royal Exchange insurance group, which has indicated it is open to offers.

Express Dairies, 8.5p higher to 144p, was back on the takeover round, and the computer group Ilion, up 5p to 56.5p, was said to be in the sights of Azlan.

Arriva's failure to sell its leasing operations continued to undermine the shares, off a further 12.5p to 360p.

The lack of bid action lowered First Leisure Corporation 7p to 225.5p and Sears, the retail chain, 13.5p to 257p.

Jones & Shipman put on 5.5p to 18p following the 20p-a-share cash bid from fellow engineer Renold. Barbican Healthcare jumped 30p to 112.5p as Bupa emerged as the signalled bidder, offering 117p a share. But Chiroscience, on the growing possibility that its anaesthetic drug alliance with Zeneca will be terminated following the Astra deal, lost a further 25p to 247.5p.

SEAQ VOLUME: 1 billion

SEAQ TRADES: 67,678

GILT INDEX: 115.14 +0.80

LONG STANDING shell candidate Dalkeith may have found the deal it has been seeking. The shares jumped 9p to 39.5p, a high, after it became known the former pubs company was in talks with an IT training business. Any deal is likely to include a cash raising exercise. Dalkeith, a plantation group before it moved into pubs, has lived recently off its cash hoard, making profits of pounds 397,000 in its last year.

MERRYDOWN, the cider and soft drink group, edged ahead 1p to 28.5p after Nigel Popham at stockbroker Teather & Greenwood suggested the slimmed down operation was back in the black.

He suggested profits of pounds 1m this year; pounds 1.8m next and then pounds 2.1m.

Last year the little group, born out of the hobby developed in a wartime prison camp by two former prisoners of war, suffered an pounds 8.3m loss.