Market Report: Double century just like the old days

SUDDENLY IT was just like the days of the bull run again, with shares scoring a record advance, largely on the back of real and rumoured takeover action.

Strong overseas markets and the growing conviction that more interest- rate cuts are on the way were favourable influences. There was also more evidence of switching out of government stocks into equities.

But, as always, it was stories of corporate action which provided the main impetus to the market.

Two golden oldies intrigued investors. Yet another spin of the old Glaxo Wellcome bid for SmithKline Beecham rumour gave drugs a shot in the arm, and British Aerospace enjoyed renewed speculation about a merger with Germany's Daimler-Benz Aerospace.

With further corporate action on the market's undercard there was a surge of confidence, although a stock shortage perhaps exaggerated some price movements.

Even so the market scored its best closing gain, with Footsie up 214.2 points at 5,037.6.

It was not the strength of the gain but the return of the index above 5,000 which attracted attention. In the eyes of many the 5,000 mark enjoys considerable psychological significance.

Only last week Footsie achieved its first ever 200-point gain. Such is the volatility of the market that it will be surprising if it has seen the last of this year's double centuries.

In the last two trading days shares have been rampant, with the index surging almost 340 points. It got off to a flying start on the strength of Tokyo, encouraged by hopes of a deal to ease the country's banking crisis, and Hong Kong. Then New York seemed set to build on Friday's advance.

Gilts suffered falls of approaching a point as the fall-out continued. Some selling was said to be due to hedge funds unwinding positions. There were, however, more signs that some investors were merely switching into equities.

Drugs were on a high on stories, subsequently denied, that SB's chief executive, Jan Leschly, intended to resign. If he did it would, the market believes, open the way for Glaxo to renew its bid ambitions, which were dramatically ended early this year. Glaxo rose 111p to 1,661p and SB 37.5p to 616p.

BAe flew 35p higher to 391p. It refused to lend credence to the speculation of a German deal but did not issue a denial. It said it had for years been involved in talks with European companies about restructuring the aerospace industry.

General Electric Co, a long-rumoured BAe bidder which could intervene if a deal with the Germans was announced, gained 24p to 460p.

Others to catch the corporate mood included Tarmac, up 13p to 93p, after saying that it is in merger talks with Aggregate Industries, 7p harder at 63.5p. Cash-and-carry chain Booker improved 6p to 142.5p on talk of a consortium offer.

Publisher Cassell doubled to 100p as Macmillan Publishing appeared with a 100p-a-share offer, which was rejected. Golden Rose, the radio group, moved 4p higher to 61.5p after sounding takeover action, and Viglen Technology firmed to 23.5p as the mandatory offer for the computer company was launched by Alan Sugar. Little Prism Leisure jumped 8.5p to 71.5p on the prospect of bid action.

Weekend talk that Newcastle United was in the bid frame, prompted a 9.5p gain to 85.5p, and rivals Sunderland rose 17.5p to 457.5p after ex-BSkyB man David Chance arrived in the boardroom.

Some retailers missed the fun. Marks & Spencer, for long the sector bellwether, was responsible. There has been talk of sagging sales, and over the weekend it emerged that M&S may cut back its international expansion programme. The shares slipped 3p to 439p. Boots fell 15p to 910p and Dixons 2p to 530p.

Colt Telecom, on talk of buying by Bear Stearns, recovered 63p to 498p, and others which suffered heavy punishment in recent weeks, such as Barclays, up 93p at 1,062p, and fund manager Amvescap, 31p to 364p, also rallied. Siebe, the engineer, improved 21p to 220p as Merrill Lynch said the shares were "good value".

Brands Hatch, the motor sports group, held at 166p as a fund related to chief executive Nicola Foulston acquired 5.07 per cent at 165p, lifting its stake to 29.76 per cent. Chemical group Meristem was unchanged at 37.5p. After the market closed it became known that engineer Torday & Carlisle had increased its stake to 27.71 per cent.

Weak trading hit Brent International, the chemical group, off 14.5p to 81.5p, Network Technology, 11.5p to 37p, and plumbing materials group Bridgend, 2p to 11.5p.

Tertiary oil shares suffered falls. Sodra Petroleum, 65.5p in June, fell 5p to 17.5p after its fourth drill off the Falkland Islands was abandoned. Related Desire Petroleum lost 12.5p to 65p. Emerald Energy fell 0.5p to 8p.

SEAQ VOLUME: 904.3 million

SEAQ TRADES: 74,337

GILT INDEX: n/a

PROPERTY GROUP Orb Estates jumped 9p to 60.5p as control changed hands. Peter Catto, the chairman of Atlantic Caspian Resources, which is seeking oil and gas in Kazakhstan, appears to have acquired 29 per cent of the capital from former chairman Denys Cole.

In the year to June 1997 Orb reported profits of pounds 360,000 against a pounds 1.5m loss in the previous year. It is capitalised at less than pounds 4m.

BORDER TV, the last fully independent television station in Britain, firmed 5p to 315p as Henry Cooke Lumsden made bullish sounds. Profits will be down this year, but the broker expects a record pounds 4.5m next and then pounds 5.5m.

The group recently launched the Century 105 Radio station, and analyst David Gorman says that sound rather than vision is emerging as the main force behind the group's expected profits growth.