Market report: Footsie lifted by bid speculation after US deals

EQUITIES made a subdued start to the new tax year. Domestic interest rates, the crippled Japanese economy, a rush of ex-dividends and the coming Easter holiday combined to offer a little credence to the latest downbeat fund managers' survey.

Then came the huge US financial merger, the Citicorp deal with Travellers to create Citigroup. Within minutes banking and insurance shares were engulfed in yet another round of intensive bid speculation with Norwich Union leading the charge.

The new American group, embracing banking, insurance and securities, will dwarf Europe's biggest and underlines that yet more financial get togethers are inevitable.

Deals among US groups on the Citigroup line, as well as European and trans-Atlantic liaisons, are already occupying the minds of analysts and investors.

Norwich rose 23p to 486p; Standard Chartered (rumoured last week to be in Citicorp's sights) 39p to 903p and Royal Bank of Scotland 41p to 1,000p.

National Westminster Bank, for long regarded as the ultimate Barclays target, gained 45p to 1,162p and Barclays put on 64p to 1,842p.

It was enough to take Footsie to yet another peak. At one time down 23.5 points, the index ended 41.6 higher (after 51.6) at 6,105.8. Before the excitement the stock market dwelt upon the survey which showed more fund managers believed shares were already overvalued.

Blue Circle Industries was the biggest blue-chip faller, down 21.75p to 357.5p. It was hit by a warning of a cement glut by its Swiss rival, Holdersbank Financiere Glarus.

BCI also had to contend with its shares going ex-dividend, lopping around 10p from the price.

EMI and Carlton Communications were unchanged following NatWest Securities disenchantment. It suggests shareholdings should be cut. EMI recovered an early fall to close at 500p and Carlton held at 460p.

Zeneca, the drugs group, was on a high, jumping 102p to 2,762p. Takeover speculation was one influence; another was positive trial results on Nolvadex, a treatment for preventing breast cancer.

British Petroleum firmed to 880.5p ahead of an investment presentation today which should include details of a series of five-year performance targets.

Pilkington, the glass maker, held at 116p. It is setting up a glass plant, with its arch rival Saint Gobain, in Colombia. The company is regarded as one of the stock market's prime recovery situations and is attracting American interest. Around 26 per cent of its shares are now held in the US. The group's next set of results are due soon - stockbroker Charterhouse Tilney has forecast pounds 115m.

Compass, the contract caterer which has just joined Footsie, gained 27p to 1,105p before encountering the perils of order driven trading when a rogue trade punched in a daft price at the close.

Orange, the mobile phone group, added 12p to 440p, reflecting the clearance of the SBC Warburg stake. Racal Electronics dialled a 3.5p gain to 336.5p on reports of a General Electric Co bid. Hepworths, the building materials group, put on 6p to 244p as takeover chatter resurfaced.

Courtaulds was little changed at 465p. Dutch group Akzo Nobel confirmed it is stalking the chemical group. It is thinking in terms of a cash offer of around 450p a share, pricing its target at pounds 1.8bn.

At one time Courtaulds was off 16p. But hopes still linger Imperial Chemical Industries could be tempted to revive the hostilities it displayed in the 1960's.

Admiral, the computer group, improved 47p to 1,119.5p after an analysts presentation; Independent Radio rose 9p to 86.5p after a 20 per cent-owned associate won the contract to run a station in Scotland.

Avocet Mining glittered 12.5p higher to 66p. Talk it may buy a tungsten mine appear to be wide of the mark but the group, which is raising pounds 18m, expects to announce a deal shortly. The improved gold price, which lifted Lonrho 5.5p top 108p, was also an influence.

Property group Merivale Moore hardened 9p to 81.5p with Saudi Arabian tycoon Wafic Said set to take a 7.6 per cent shareholding.

The fledgling Alternative Investment Market suffered an uncomfortable run of retreats as the new Gordon Brown tax regime arrived. Casualties included Dobbies Garden Centres, down 40p to 335p; Deep Sea Leisure 30p to 325p and Lady in Leisure, 15.5p to 232p.

The Brown measures mean reinvestment relief has ended on AIM shares. Investors seeking AIM relief will have to wait for new issues which, for cost reasons, are usually placings.

Broadcaster Tele-Cine Cell added 8p to 76.5p after collecting the signalled bid (80p) from Todd Europe.