Market Report: Next suits City with a smart recovery

Next, the retailer, ended a threadbare week with a smart, if modest, recovery. The shares rallied 41p to 753p as investment house Morgan Stanley, long time fans of the group, dismissed the bear stories which have swirled around the stock market and upgraded its recommendation to "strong buy".

At one time the price was up 67p. It slipped back in the last 30 minutes. The shares started the week at 825p.

Analyst Peter Brockwell said the market "had grown increasingly alarmed by what amounts to scare mongering and has lost touch with the fundamentals of the company".

Rumours questioned the health of chief executive David Jones, the man responsible for rescuing Next when it seemed destined for the corporate graveyard. They also claimed there were problems with the chain's spring range and a profits warning was being prepared. A fit Da vid Jones has told inquirers he is prepared to challenge them to two rounds of golf and Mr Brockwell said the Next chief executive "is very well and is mystified by persistent reports of his ill health in the City".

The analyst said he was "firmly of the opinion that there is no requirement for a profits warning".

He pointed to the group's Christmas trading report when it said sales had gone well and said autumn/winter stocks had been cleared. The spring range was in the shops in January.

The signalled departure of chairman Lord Wolfson of Sunningdale, who is also chairman of Great Universal Stores, was interpreted as diminishing the chance of a GUS take over strike.

Last month Next shares hit an 835p peak. When disaster appeared inevitable at the end of 1990 they closed at 13.5p having fallen into single figures.

GUS has, of course, alighted with a hostile 570p a share strike on Argos, the catalogue stores chain. Argos slipped 3p to 606p as Dresdner Kleinwort Benson said sell. The investment house believes there is little chance of a white knight appearing and the bid could be referred to the Monopolies and Mergers Commission.

The market ended a three day losing patch in some style with Footsie recovering 87.3 points to 5,782.9. The mid and small cap indices put on positive displays.

Schroders, the investment group, led the blue chip surge, up 140p at 2,370p. Take over talk was, of course, in the air but its year's results, due next week, probably provided the main impetus. Profits are expected to emerge at pounds 265m against pounds 238.7m with the dividend increased by 3p to 23p.

The rest of the financial pack made headway with Halifax up 14p to 937p and Prudential Corporation 28.5p to 898.5p.

Rolls-Royce continued to fly on its results, climbing a further 15.25p to 267.75p and British Aerospace rose 54p to 1,932p in sympathy. Panmure Gordon is cautious about Rolls projected progress and regards the shares as a sell.

Jarvis, the rail maintenance group shunted along at 4.75p three years ago, came within a whisker of 600p, closing at 596p.

Colt Telecom enjoyed another busy line with a 65p gain to 1,335p.

SmithKline Beecham was again active, improving 28p to 808p as bid hopes persisted. Deutsche Morgan Grenfell see the shares going to 1,100p. Glaxo Wellcome put on 34p at 1,656p.

Bass, the brewer and hotelier, frothed up 10p to 1,000p as Lehman Brothers raised its target price to 1,200p following the take over of Inter-Continental Hotels and Resorts. Morgan Stanley's forecast of 625p for Allied Domecq had no immediate impressing with the shares falling 8p to 562p.

The end of Pearson's tormented ownership of consumer software publisher Mindscape pushed the shares up 24p to 943p.

Vodafone recovered from Thursday's reference to the MMC, gaining 23.5p to 539.5p. But BT gave further ground, off 3p to 589p.

Barcom, a plant hire group, advanced 19.5p to 68.5p after GE Capital, the US group, emerged with an agreed 72p a share takeover bid. Healthcall moved forward 13.5p as Transworld Healthcare signalled a 105p offer.

FirstGroup's controversial pounds 140m swoop for Great Western, the railway, gave the shares a 34.5p push to 308p.

Vaux Group, the Sunderland-based brewer and hotelier, fell 6p to 229p, a shade above its 12 month low. Profits this year are expected to be around pounds 40.7m against last year's pounds 38.3m.

Prime People, the recruitment group, put on a further 2.25p to 13.75p ahead of next week's figures and Rage Software, continued to draw support on talk of a new computer game, gaining 1.25p to 10.5p.