Market Report: Gentle consolidation follows record-breaking surge

After Friday's astonishing exuberance, shares enjoyed a session of gentle consolidation. Footsie matched its trading high before ending off only 6 points, with dividend payments responsible for 4.4 points of the fall.

The record breaking surge has encouraged higher Footsie forecasts; BZW, for example, has lifted its end-1998 estimate to 6,000.

Exporters continued to enjoy the softer pound following what the stock market regards as the Government's nod and a wink about its EMU ambitions. After their stratospheric performances on Friday some financials were much quieter but insurances moved ahead, with Commercial Union stretching to a new high.

Up 36p on Friday, CU added 32p to 818.5p with its substantial French interests causing excitement as well as the inevitable bid rumours; Lloyds TSB was suggested as the predator.

Ladbroke, the betting to hotel chain, was another to claim new high ground, up 10p to 276.5p Merrill Lynch support was one influence with the securities house pointing to profits up pounds 57m to pounds 220m this year and reaching pounds 256m next.

Hilton Hotels Corporation, the US group, intends to buy a 5 per cent stake and its holding could eventually move to 20 per cent.

The merger that never was - Asda and Safeway - switched the spotlight to food retailers with the market alighting on Wm Morrison as a likely bid target.

It was felt either of the two thwarted giants could descend on the Bradford- based group. Morrison, where there is still a strong family shareholding, rose 12p to 210p. Asda fell 5p to 159p but Safeway, which would have been the junior partner, put on 9.5p to 405.5p.

T&N, where bid action has broken out, gained a further 11p to 253.5p on expectations that the American offer will attract a higher counter- bid. Federal-Mogul Corporation has indicated a bid of 235p. Among those that could be tempted is LucasVarity.

JKX Oil & Gas jumped 7p to 56p as the Ramco Energy bid was abandoned. Ramco's retreat was prompted by determined JKX share buying by UkrGazprom, a Ukrainian group which now has 22.24 per cent.

Great Universal Stores, the subject of a less than fulsome trading statement on Friday, gained 12.5p to 692.5p in heavy trading, with Seaq putting volume at more than 22 million shares including a 7 million trade between market-makers at 699.5p.

WH Smith dipped 5.5p to 365p as the takeover of Books Etc by America's biggest bookseller was read as putting further competition on the struggling retailer.

Unilever softened 18p to 1,784.5p ahead of investment presentations in Holland tomorrow, London on Thursday and New York on Monday.

Hambros, the merchant bank still feeling the impact of its Co-op misadventures, jumped 15.5p to 242.5p on suggestions that its Hong Kong tormentors will return with a determined break-up plan.

ScottishPower surged 19p to 471p following The Independent's report that it may float its telephones business for pounds 800m, equal to 70p an SP share.

Publisher Reed International had another difficult session reflecting the incorrect circulation figures at its Travel Group unit. There are estimates that it could pay up to pounds 150m in compensation to advertisers and have to make a write-down of as much as pounds 150m. There are also worries that the miscalculation could damage Reed's alliance with its Dutch partner.

Christian Salvesen, adjusted for its Aggreko spin-off, ended down 3p at 112p. Aggreko, a generator hire group, was up 8p at 164.5p. The arrival of the power play has ended its former parent's days as an FTSE 250 constituent. Salvesen has been relegated to the SmallCap index with its FTSE 250 spot taken by Aggreko.

BTP, the chemical group, hardened 8p to 343.5p as NatWest Securities drew attention to the more focused attitudes of chemical companies and suggested BTP could be tempted to sell its adhesives division. It believes the company is now worth around 390p a share but with the adhesive interests sold the shares could be worth nearer 430p.