MARKET REPORT Perpetual reaches new highs as bid fever grips financial sector

Inexorably, as if driven by the scent of the inevitable takeover bid, shares of the Perpetual unit trust group stretch to new peaks.

They climbed another 13p to a record 1,313p, reflecting what many believe is discreet buying on the assumption the highly successful group's days of independence may be numbered.

In the excitable bid fever that now engulfs the financial sector, it is not difficult to make a case for a Perpetual strike.

Since being launched by chairman Martin Arbib 20 years ago, the group has powered ahead. Profits have soared from £1.7m in 1990 to £35.4m, with the shares surging from 38p.

With the fund manager Jupiter Tyndall seemingly about to fall to the German Commerzbank, Perpetual, enjoying a stock market valuation of £350m, must be glancing anxiously over its corporate shoulder although Mr Arbib has remained a dominating presence.

The expectation that takeover action will soon break out in the financial sector was a strong influence. Gartmore edged ahead 3.5p to 171p and Smith New Court rose 8p to 462p.

On the merchant banking pitch, Kleinwort Benson was again firm. The shares improved a further 22p to 657p, not far from the level at which the company felt obliged to rush out a statement saying it could not explain the strength of its shares. At one time the price touched 660p, with Seaq putting turnover at an intriguing 2.7 million shares.

A German strike is regarded as the most likely outcome, although Kleinwort is clearly keen to retain its independence and would fight anything except what it regarded as an irresistible offer.

Schroders and Hambros were among other financial stocks to shine in what, after a bright start, turned out to be a dull market.

At one time the FT-SE 100 was up 29.5 points and seemingly intent on extending the recent strength to a stage when 3,200 would be challenged. In the event the effort proved too much and the index closed 3.3 lower at 3,136.4.

Even so, such a display, with turnover again high, was regarded as encouraging, particularly as international shares suffered as the dollar endured a late shake-out.

Guinness was the best performing blue chip, rising 16.5p to 438p on its top-of-the-range results and a hint of a share buy-back. Its performance encouraged other drink shares.

BTR was again wanted, up 6.5p at 323p with Salomon Brothers reported to be seeking the warrants. Kingfisher, the stores group, rose 9p to 464p on talk of an intriguing development, possibly an acquisition.

Stakis, the leisure group, improved 2p to 86p as the renamed ABN Amro Hoare Govett advised clients to move out of Ladbroke and Forte into the shares.

Eurotunnel ended 10p lower at 233p. It issued a statement saying current banking arrangement, still to be approved, do not involve any share issue. P&O gained a further 9p to 589p.

Lloyds Chemists dropped another 17p to 200p, on growing worries about the future of high street shops following the demise of Dewhurst, the butchers.

Medeva, the drugs group, jumped 13p to 213p as takeover talk, originating in the US, captured the imagination. Trading was brisk, with volume printed at 5.6 million. The shares are now at their highest since the summer of 1993. Fisons, for long one of the market's favourite bid candidates, was put forward as a possible predator. The shares fell 2p to 165p.

Redland, rumoured to be contemplating the sale of its French aggregates operation for about £350m, improved 4p to 455p.

Spirax-Sarco, an engineer, jumped 42p to 478p following results. Another to respond to figures was Quality Software, a computer house, up 22p at 390p. Pentex, a little oil group, gained 5p to 100p on its results.

Kenwood, the electric appliance group, rose a further 10p to 279p on continuing Warburg support. PhoneLink advanced a further 21p to 259p, reflecting its BT link.

Electricities, awaiting today's Littlechild pronouncement, were cautious. There were suggestions that investors were registering their continuing dismay with the partly paid generator shares by switching into the fully paid version.

Magnum Power, producing a chip which protects a computer's power supply, rose 2p to 126p. It is raising £2.4m via a share placing. The shares arrived at 35p in August.

North Sea Assets rose 2p to 34p as Dresser, a US group, emerged as the bidder, offering 34p. The defence vehicle group Alvis, which recently announced a sharp increase in orders, rose 3p to 72p. There is renewed talk that the group, which used to be called United Scientific Holdings, is planning to sell, or at least reduce, its holding in its quoted Singapore associate.

Tepnel Life Sciences held at 33p as Barings Exempt UK Smaller Companies Trust acquired 3 per cent, removing, it was felt, a hovering line.

UK Estates, created from the old Sheafbank Property Trust, has lost the support of Equitable Life Assurance, which has sold its 10 per cent share holding, and gained increased backing from one of Britain's oldest banking families. Hoare Trustees, related to the privately owned banker, C Hoare & Co, has lifted its stake to 12 per cent. UK Estates shares held at 21p.

United Breweries, the tiddler which suffered a £1m trading loss in its last financial year, is expected to return to the stock market next month after a rescue revamp which includes the acquisition of Inn Business, with 73 pubs. UB Group, the Indian conglomerate, is pumping £1.5m into the group and a placing and open offer will raise a further £5m. The shares were suspended at 6 .75p.