Market Report: ICI and Zeneca gain as first interims loom

IMPERIAL Chemical Industries and its former drugs divison, Zeneca, held centre stage as the stock market tired of the Maastricht debate.

On Thursday the two groups are due to produce their first interim profits since they split. In anticipation, ICI gained 6p to 651p and Zeneca, weak since the demerger, 14p to 613p.

ICI, expected to report about pounds 150m, enjoyed the added spur of significant US support. Since the demerger US investors have been chasing the shares and through Morgan Guaranty Trust ADRs have lifted their shareholdings from 9 per cent in May to 12.36 per cent. There are indications that the transatlantic support is continuing.

Zeneca could report profits of about pounds 345m and some believe that, although its drugs portfolio is unexciting, the group will be able to accompany its results with an encouraging statement about current trading, particularly in the US.

The market recovered from a poor start. At one time the FT-SE 100 index was down 18.9 points. But as the politicans debated, shares recovered on the correct assumption that the Government would win the latest, and presumably last, Maastricht vote. But after recording an 11.9 gain in mid-afternoon the index gave ground as a few sellers appeared and at the close was up 7.6 at 2,827.7.

Besides the Westminster debate the latest stresses and strains in the European exchange rate mechanism helped retard activity. However, there are lingering hopes that further Continental interest rate cuts could prompt a UK reduction.

Life insurance shares had a difficult session. The surprise government move to force insurance salesmen to reveal their commissions sent prices tumbling.

Legal & General fell 31p to 470p and Prudential Corporation 22p to 309.5p. Lloyds Abbey Life lost 28p to 412p and Refuge 53p to 950p.

Some composite insurers were also weak, with Commercial Union off 14p at 609p.

Lloyds Bank, which controls Lloyds Abbey and is due to open the bank interim profit season next week, lost 6p to 558p.

BAT Industries, another due to release figures next week, edged forward 5p to 449p. The shares were hit by the first Philip Morris price-cutting initiative but have shown some firmness in the past two weeks.

NatWest Securities points out that BAT's US operations represent less than 20 per cent of group profits. It believes that although US and European tobacco sales will be lower, gains in other parts of the world should enable the tobacco side to turn in an improved result.

Financial services continued to progress and interim profits should emerge at pounds 710m against pounds 630m.

British Airways again reached a new high, up 6p to 326p.

Granada Group was again weak, down 5p at 392p. Since it swooped on LWT (Holdings), snatching more than 20 per cent of the preferred shares, Granada has lacked inspiration, with some large lines of stock coming on offer.

Rolfe & Nolan, a computer group, became the latest to suffer from a cautious trading statement, falling 28p to 255p.

Supermarkets showed some resilience after their recent weakness. J Sainsbury improved 7p to 458p and Tesco, opening one of its new- style Metro outlets in the City, moved forward 3.5p to 202.5p. But Asda, where Robert Fleming has sold more than 1 million shares, cutting its stake to 6.01 per cent, and Argyll remained neglected.

British Aerospace advanced 8p to 404p as the market waited for its joint jet venture with Taiwan to be signed. The Taiwanese have still to raise the cash but, after a succession of delays, appear to be on the verge of being able to complete the deal.

Hartstone, the hosiery and leather group, recovered another 7p to 56p as it announced a standstill agreement with bankers. The US Fidelity investment group, renowned for moving in on what it sees as recovery stocks, continues to buy. It lifted its stake to 6.06 per cent.

Brent Walker, the hard-pressed betting shops and pubs group, fell 1p to 6.75p. The shares were ruffled by an agency cross at 5.5p a share.

Oils moved forward, with British Petroleum up 4p at 294p. Aviva Petroleum rose 6p to 71p. Henderson Crosthwaite placed 15.51 per cent for a US shareholder with UK institutions.

The FT-SE 100 index ended 7.6 points up at 2,827.7 and the FT-SE 250 index 2.4 at 3,202.9. Turnover was 539.6 million shares with 24,895 bargains. The account ends on Friday with settlement on 9 August. Government stocks tended lower.

CRP Leisure, suspended at 7.5p in March, is poised to return to the market. New directors, headed by the stockbroker David Cunningham, have reshaped the company, which now consists of the profitable Victor Mara stage scenery business. The search is on for acquisitions and a cash call is likely. In the year to October CRP lost pounds 612,475 and a further pounds 117,300 in the following six months.

Gibbs Mew, the Salisbury brewer, which last year repulsed a bid from Brierley Investments and acquired the UK D drink wholesaling operation, climbed 52p to 324p this week. Some director buying has been evident. In the year to March profits came out at pounds 1.2m. Panmure Gordon expects pounds 2.8m this year and pounds 3.1m in the following year and forecasts dividends climbing from 7.5p to 8.1p and then to 8.8p.