Market Report: Footsie pulls back from the 3,000-point brink

AFTER the storm came a fragile calm. Shares see-sawed, but at the end of a rather indifferent session the FT-SE 100 index was off just one point at 3,019.7.

At one time it had looked as though the crucial 3,000 barrier was about to crumble.

What could be regarded as illustrating the stupidity of the current behaviour of the stock market was highlighted by the first 45 minutes' trading, when the index gyrated from a 10.5 gain to a 16-point fall which left it less than five points from the dreaded drop.

Through it all, as on Wednesday when the index crashed an alarming 68.4, trading was moderate, according to Seaq.

But there are real fears that a fall below 3,000 could provoke a rush of panic selling.

Euopeans have, it would appear, been reducing their British exposure and now there is talk that American investors have been quietly unloading.

'Any examination is likely to show they have, if discreetly, been net sellers this year,' said one trader.

Many expect the market to drift until the European elections which, it is felt, could force government changes.

Interest rate and inflation worries remain the main cause for concern, although this week's sudden trailing off in the confidence of trading statements is being cited as a further example of the sluggishness of the move out of recession.

Government stocks had a calmer session with long-dated stocks more than a quarter easier but mediums firmer.

The signalled Eurotunnel rights issue, finally set at pounds 816m, had little impact with about three-quarters of the cash call likely to be met by French investors, who have shown far more commitment to the venture than their British counterparts. The shares fell another 7p to 348p.

Lucas Industries, still reeling from its US problems, found support from Henderson Crosthwaite. Analyst Richard Speed took the view the fall prompted by the US difficulties provided a splendid buying opportunity. He forecast profits of pounds 60m this year, followed by pounds 138m and then pounds 210m. The shares, however, lost 2p to 176p.

Shoprite, the food discounter, crashed 54p (after 64p) to 90p. The shares, down 19p on Wednesday, were 243p earlier this year. A sharp interim profits decline and a cautious statement did the damage.

Interim figures also left Trafalgar House down 9p at 86p, with indications that year's profit forecasts had been slashed. Hoare Govett was said to have lowered from pounds 85m to pounds 60m.

The agreed bid by BSG International for motor trader Jessups provided a flurry of interest. Jessups motored 28p to 126p, prompting sympathetic interest in Lookers, up 8p 256p.

Granada put on 7p to 497p as Smith New Court said buy, and Unilever went ahead 6p to 995p as Barclays de Zoete Wedd, for long bears of the stock, adopted a more bullish stance.

Chubb, the security group, enjoyed the support of a James Capel recommendation, ending 8p higher at 368p. Results are due next month.

Tottenham Hotspur had an awkward session with stories, denied by the Football Association, circulating that it had been fined pounds 1m and, in effect, relegated to the First Division.

Norcor, a paper group placed at 120p, managed a firm debut, ending at 127p.

Builder Donelon Tyson, where the US investment house Morgan Stanley has displayed an interest, fell 2p to 13p. The shares lost 4p on Wednesday. They were 26p earlier this year.

Year's results are due and there are worries that the pounds 900,000 expected by some analysts will not be reached. In the previous year profits were pounds 1.56m.

Morgan has built a 12.13 per cent shareholding in the obscure Cheshire group.

Engineer Meggitt, after warning that first half results will be lower, fell 3p to 98p.

Pentland, the shoe group, retreated 6p to 91p with Smith New Court said to be sellers.

Dealings are due to resume in the shares of Hobson today. Hopes of a big premium have evaporated and most are looking for at best a 29p opening against the 27p suspension price. The group has, during its share trading halt, been transformed by the takeover of the Co-op's food manufacturing side. Profits of pounds 5m this year and up to pounds 15m next are suggested.

Tamaris, the nursing homes group, held at 2.5p as its pounds 2.5m cash call, the fifth time it has raised equity since its flotation six years ago, attracted a 35.6 per cent take-up. The company has four homes with 260 beds and is thought to be on the verge of buying two more. There is speculation it will return to the market later this year with a bigger rights issue, perhaps for pounds 15m.

Exploration Co of Louisiana jumped 20p to 100p. A US analyst, Alan Gaines, raised his rating to 'strong buy' on expectations the group would soon announce it had struck it rich in its off-shore China joint venture. Mr Gaines said sources had told him oil will be flow-tested within a week. The field is thought to have reserves between 300 million and 1 billion barrels.