Market report: Marching orders for four shares in blue chip shake-up

FOUR shares were yesterday unceremoniously kicked out of the FT- SE 100 share index, still regarded as the stock market's leading performance indicator.

The casualties of the latest quarterly revision are Fisons, Kwik Save, Lasmo and Southern Electric. They are replaced by Wolseley and RMC, the building materials groups, SG Warburg, the merchant banker, and British Aerospace.

The changes were in line with speculation although BAe and RMC enjoyed late runs. The removal of Southern Electric, the first utility to suffer such a fate, will draw a response from the many who feel the index is over endowed with privatisation issues.

There is, however, a view that the quarterly FT-SE 100 changes are beginning to devalue its significance. Perhaps, it is argued, the index should enjoy a period of relative tranquility to allow a period of reflection.

Only last week, to accommodate Zeneca, English China Clays lost its membership. The latest changes mean that six adjustments have been made this year. Last year there were 19.

Indeed, two of the constituents that have been removed - Kwik Save and Southern Electric - were only admitted last year.

The FT-SE 100, with an over-exposure to company dinosaurs in the eyes of at least one fund manager, has failed to recognise the wider market's performance this year. As if to underline the argument, the FT- SE index measuring the next 250 shares romped to yet another peak, up 15.3 points to 3,213.4. It was the first time the second line index had topped 3,200.

It has outperformed the more illustrious blue chip index for most of this year. And many believe it will continue to show a clean pair of heels to the more widely followed 100, emphasising the growing gap between the top 100 shares and the rest.

The broadening gap is likely to cause a few problems for fund managers who have been content to measure their performance against the FT-SE 100. It is likely that more trustees will look to the FT-SE 250 index, and the FT-SE 350 which combines the two, to judge their managers' ability. The 350, at 1,431.6, is 25.5 from its peak, dragged down by the sluggishness of the 100.

The latest changes left Wolseley 3p higher at 634p; Warburg 3p lower at 717p; British Aerospace 14p up at 423p; and RMC 1p better at 775p.

The banished suffered mixed fortunes. Southern Electric, considered safe until this week, fell 3p to 462p. Kwik Save lost a further 8p to 742p and Lasmo 3.5p to 159.5p. But Fisons, on US prospects for its Tilade drug, gained 5p to 154p.

The FT-SE 100 role of Warburg will, it is expected, attract attention. It is widely believed that the merchant bank, enjoying the benefits of the Zeneca and BT share flotations, had hoped to remain outside the index's orbit. It is, of course, happy to be a constituent but frets about the possible headlines should it be removed.

The FT-Se 100, still in its old form, ended 22.5 points higher at 2,866.9. More encouraging signs of economic revival, the new Chancellor's upbeat comments and futures- related buying kept the market bubbling.

But MB-Caradon, the building materials and security group, missed the fun. It fell 16p to 277p as some investors continued to fret about a reorganisation at a US group seen as a significant rival to an MB off- shoot. Goldman Sachs, the US investment house, added to the unease with a profit downgrading.

Indications that AT&T, the US communications giant, was raising funds put the spotlight on Cable and Wireless. Although the trans- Atlantic group is almost certainly drawing in extra capital to support its normal business operations, some took the view that it was topping up its coffers before bidding for C&W. The speculation was enough to lift the shares 15p to 743p.

BPB, the plaster board group, fell 14p to 221p as worries surfaced that the 11 per cent March price increase was not holding. T&N, the motor components group, gained 6p to 192p ahead of a rumoured investment presentation.

Drug shares had a more restful session, with Zeneca, in busy trading, rallying 8p to 620p with the nil paid up 6p at 20.5p. Favourable comment and buying by US houses Bear Stearns and Salomon Brothers turned the tide.

SmithKline Beecham fell 6p to 429p following the sale of its body and haircare brands.

The growing interest in the oil and gas resources of the former Soviet Union helped Aminex, where East West Oil has lifted its interest to 29.2 per cent, up 5p to 25p (after 27.5p). Ramco Oil Services, with interests in the Caspian Sea, jumped 15p to 170p.

Carlisle, the property services group, edged forward 0.5p to 16.5p as entrepreneural investor Nigel Wray lifted his stake to 10.18 per cent.

Helene, the fashion group, edged ahead 0.5p to 23.5p. Credit Lyonnais Laing is impressed with the group following the take over of Gabicci. It forecasts profits this year up pounds 1.5m to pounds 4.5m with pounds 5.8m next. Earnings per share growth is from 2.4p to 2.5p and then 3p.

Tracker Network, traded under the rule 535 facility, has made remarkable headway since stockbroker Williams De Broe raised pounds 8m three months ago. Placed at 257p the shares are now around 400p. The company has the UK licence for a radar system to combat car thefts. It has attracted interest from UK police forces and if it becomes widely used could lead to lower car insurance costs.

Shares of Corporate Services, a recruitment group, rose 1p to 22.5p as Carr Kitcat & Aitken drew attention to its recovery potential. Analyst Jeffrey Harwood expects profits of pounds 800,000 this year and pounds 1.75m next. The company has suffered losses in four of the past six years. In November the shares were down to 5.75p. A year earlier it raised pounds 2.3m through a rights issue at 42p.