Market Report: Private investors focus on equities

SMALL investors pushed shares to new peaks yesterday. In the busiest day of the year turnover topped 900 million shares, with 45,500 bargains recorded.

But blue chips saw little of the action. In fact the top shares that make up the now largely ignored 30 index could not muster a solitary gain. The FT-SE 100 index, with 47 pluses, closed 3 points higher at 3,009.1 but, underlining the strength of the activity outside the leaders, the FT-SE 250 index surged 21.2 to 3,451.8.

Wednesday's heroics, with the Footsie breaking through 3,000, appear to have directed the minds of many private investors towards the stock market as they contemplate the poor returns offered by building societies.

With the possibility of yet lower UK rates, as some expect a 1-point cut within a month, many private client traders were particularly busy and the rush into unit trusts gathered pace.

Utilities, with their high yields, were in demand. Thames Water rose 8p to 507p.

The more subdued economic statistics made little impression; so did a weak New York.

But the next account - covering three weeks - could, some believe, produce some significant profit-taking. Kleinwort Benson, not expecting an interest-rate cut until October or November, believes the FT-SE 100 index could go down to 2,900.

US influences produced a sharp gain in Vodafone, the cellular radio group. The shares jumped 12p to 517p on determined transatlantic buying, with the story of an AT&T takeover bid resurfacing. American investors already have more than 20 per cent of the capital, encouraged by Vodafone's lower rating compared with US mobile telephone interests.

Cable and Wireless was also firm, although it failed to hold its best level following suggestions of a cautious lunchtime investment meeting. The shares ended 7p higher at 842p.

Standard Chartered, at one time down 23p, rebounded to hit 949p, up 51p as the market warmed to its results.

The upsurge means that Lloyds Bank could be tempted to sell its 4.62 per cent stake, a legacy of 1986's fierce and unsuccessful takeover bid. Lloyds, up 4p at 548p, could unload at a modest profit and many expect a move to place the shares to occur shortly.

Beers were weak, with worries about supermarkets squeezing margins of the highly profitable premium lagers doing much of the damage. Whitbread 'A', off 19p at 514p, also had to contend with a flow of cautious comments, with Cazenove and UBS Securities said to be adopting bearish stances.

The low voting shares have drawn strength recently from hopes the brewer will follow the example of Great Universal Stores and produce an enfranchisement scheme.

Marks & Spencer, up 5p to 369p, was helped by a profit upgrading, thought to be by Smith New Court. Supermarkets, under pressure on overcapacity and competition fears, perked up, with UBS said to be on the verge of producing a strong buy recommendation. Because of their recent decline food retailers now rank as the worst-performing sector this year.

Ratners, the troubled jeweller, gained 1p to 37.5p. The market was encouraged by details of an executive option scheme that can be exercised once the shares have held an average price of 60p for three months. The options cover 5 million shares.

Redland, the building materials group, put on 23p to 553p. A sharp increase in German housing starts helped. So did a Barclays de Zoete Wedd profit upgrading. The securities house has moved from pounds 246m to pounds 255m for this year from pounds 265m to pounds 287m for next.

London International gained 12p to 213p. It has developed a polyurethane condom.

Thorn EMI fell 31p to 931p. The shares were unsettled by a bond conversion that could produce an overhang.

Invergordon Distillers was back in the takeover spotlight, up 8p at 292p. The suspicion that American Brands, owner of Whyte & Mackay, will resume hostilities is never far below the surface. In the summer of 1991 the US group narrowly failed to win control. It has since sat on 41.3 per cent of the shares.

American Brands offered 275p a share. Invergordon has been as high as 332p this year but the more subdued outlook for the Scotch whisky industry has taken its toll. Profits are expected to fall from pounds 32.5m to pounds 30m.

Hard-pressed Spring Ram fell 2p to 62p with hopes of a bid fading.

Tadpole Technology, the spectacular computer high flyer, continued to encounter a trickle of selling. The shares, launched at 65p, at one time reached 364p. They eased 5p to 245p.

The FT-SE 100 index, at one time up more than 13 points, settled for a 3.0 gain to 3,009.1 and the FT-SE 250 index climbed 21.2 to 3,451.8. The account ends today with settlement on 23 August. After active trading government stocks ended little changed.

Crest Nicholson improved 8.5p to 71.5p after cutting its unlet office space by 50 per cent by letting properties at Farnborough and Maidenhead. 'Reverse' premiums of pounds 2m were needed to tempt the tenants. The group expects a substantial earnings lift although the lettings will not have much impact this year when pounds 2.5m is expected. But forecasts of pounds 6m for next year are likely to be revised.

GBE International, the old Downiebrae Holdings, was firm as the market got wind of an environment contract with one of the privatised water companies. It is suggested the deal could be worth up to pounds 7m over a number of years. GBE, which also has tobacco machinery interests, reversed into Downiebrae earlier this year. The merger involved a vendor placing and rights issue at 60p.