Market Report: Index on course to top 3,000 by Budget day

SHARES stretched to another high yesterday as the stock market sought to fulfil the prediction that the FT-SE 100 index will break through 3,000 points by the time the Chancellor presents his Budget next Tuesday.

The index surged 35.2 to 2,957.3, adding pounds 6.5bn to share values, Datastream calculated.

It was the fourth time this month that the market had hit a new peak, and the eighth time this year.

A week ago, James Capel surprised many by suggesting the index would top 3,000 by Budget day.

Declining interest rates and the growing belief that the economy is at last beginning to recover have fuelled the rise. The index has climbed 110.8 points since the start of the year and a remarkable 579 since the enforced sterling devaluation in September.

The batch of more encouraging surveys and the latest credit figures helped shares to continue to build on the strength created by last week's German interest rate move. A strong New York opening added to the enthusiasm.

However, much of the activity took place in the futures market, with turnover in the cash market, at 653.4 million shares, a disappointing reflection of such sharp price improvements.

Still, there is growing evidence of more direct institutional involvement.

Legal & General said it had switched funds from overseas into the UK. David Shaw, investment strategy director, said: 'Leading business indicators are now pointing to an imminent quickening in the pace of the UK recovery.'

The FT-SE 250 index was also in record-breaking form, up 11.8 at 3,119.7.

But Glaxo Holdings, in busy cash trading, was at one time down to 632p following its rap over the knuckles from the US Food and Drug Administration about the promotion of its lucrative Zantac ulcer drug. However, US buying had cut the fall to 8p at 652p by the close.

Vickers, the engineering group famed for its Rolls-Royce cars, was another outcast from the party. Fears that it will accompany tomorrow's results with a pounds 100m rights issue left the shares 4p down at 119p. The figures are likely to be disappointing, a year's loss of pounds 16.6m against a pounds 12.4 million loss.

Barclays, the banking group, continued its revival, improving 13p to 421p.

Takeover excitement at TSB Group quietened, but in brisk trading the shares rose another 1p to 184p.

Beers were strong, spurred by talk that the sector was oversold and the Budget would not contain any excise duty horrors. Scottish & Newcastle and Whitbread, where talk lingers of a pooling of their brewing operations, joined the fun.

As the market became aware of improved trading at its Center Parcs holiday business, Scottish rose 7p to 446p. Whitbread 'A' rose 19p to 485p. With its big southern exposure it is seen as a quick beneficiary of any economic upturn.

Guinness gained 20p to 467p. Greig Middleton said the shares were oversold and pointed to the possibility that Guinness could resume its buying-in programme.

BT, planning a more aggressive US push, jumped 8.5p to 441.5p.

National Power and PowerGen made further headway as their positions in the long coal battle appeared to strengthen.

Oils were firm with British Gas up 2.5p to 309p on Carr Kitcat & Aitken support.

Union Discount rose 5p to 89p. Close Brothers, the merchant bank, up 2p at 340p, has emerged as the likely buyer of UD's 85 per cent owned market making offshoot, Winterflood Securities.

T Cowie, the garage and leasing group, made progress, up 11p at 225p. Besides scoring from increased activity in the car market, the group's leasing side should benefit as many contracts that had been extended are replaced. There is also a growing tendency for individuals to opt for car lease deals.

First National Finance Corporation edged ahead 1p to 57p. The shares dropped 22.5p last week after the company said it had encountered problems over a proposed refinancing.

But FMR Corporation, which specialises in picking up shares hit by misfortune and could have been expected to take advantage of the share price slump, seems to have mistimed its investment. It acquired a 3.02 per cent stake before FNFC disclosed its refinancing difficulties.

British Data Management rose 5p to 211p. One million shares were placed at 202p by Smith New Court to help to fund a property acquisition.

Mayflower Corporation, a specialist engineer, gained 4p to 51p. It has won contracts involving the supply of drivers' cabs for a new range of trucks being developed by Ford in the US.

Ticketing Group, the Keith Prowse operation, was again the day's most actively traded share. With a 64-million turnover, the shares held at 2p.

Heavy futures trading, with nearly 13,000 call contracts taken out, lifted Amstrad 1.5p to 28p.

The FT-SE 100 index climbed another 35.2 points to 2,957.3 yesterday. The FT-SE 250 index rose 11.8 to 3,119.7 with the FT-SE 350 index, which combines the two, up 14.8 at 1,457.1. The indices are at new highs. Volume was 653.4 million shares with 42,767 bargains. Government stocks were firm

It looks as though Guinness Peat, headed by Sir Ron Brierley, has picked up 14.8 per cent of Brown Shipley, on the receiving end of a 30p-a-share rescue bid from KreditBank of Luxembourg. The shares were sold by the former BS director Giorgio Rossi. If Sir Ron has acquired them, at 35p, his stake is now 22 per cent. KreditBank has 29.8 per cent. BS shares are 36p.

Bowthorpe, the electronics group, rose 6p to 294p. Hoare Govett increased its 1993 profit forecast by pounds 2m to pounds 50m and said 'buy'. It should be a significant beneficiary of sterling's devaluation with 80 per cent of sales generated overseas. HG expects dividends to increase above the market average at a time when the payments of many capital goods groups are flat.