Market Report: Rolls-Royce orders take off but its shares stay grounded

As the Rolls-Royce Motors imbroglio continues to fascinate the stock market the car group's former parent, the Rolls-Royce business making aero engines, is on the verge of winning a round of lucrative orders.

At next week's Dubai air show it is expected to have a rewarding time with airlines placing orders for the Airbus Industrie stretched 340 aircraft, featuring Rolls Trent engines.

Lufthansa is one with Rolls on its mind. The German airline is likely to head the queue to bolster Rolls order book, already benefiting from a stream of orders. Since the start of last month contracts worth more than $1.5bn have been won. Besides Trent, orders have covered regional aircraft and helicopter engines.

Rolls, just a shade higher at 217.5p, has also achieved Government support. Up to pounds 200m of taxpayers money is to be pumped into the development of a new generation of Trent engines over the next three years. The company believes it is on course to deliver double-digit earnings growth over the next five years.

Despite its bulging order book Rolls shares have failed to get airborne. They did hit 268.5p in June but Far Eastern links have eroded sentiment and the shares fell to 209p last month.

Vickers, which wants to sell its Rolls motor division, reversed 7p to 228.5p as BMW's display of road rage forced Mayflower, off a further 8p to 168.5p, to abandon its bid ambitions.

Equities suffered another lacklustre run with Footsie, spinning haphazardly in a narrow range, closing off 9.4 points at 4,711. Supporting shares were quick to get the downbeat message.

Exporters were again savaged as the poisonous cocktail of high interest rates and uncomfortably strong sterling took its toll. Among shares under pressure were Smiths Industries, TI, British Aerospace and GKN.

Zeneca fell 6p to 1,721p, lowest since the wpring. The shares have lost their exuberance, which lifted them to a 2,265p peak, as takeover hopes have faded. Now stockbroker Greig Middleton has suggested a sale on trading considerations. It has put a 1,520p valuation on the shares.

The drugs group, says Greig, is set to demonstrate superior growth in the next four years but prospects beyond 2,001 "do not support the current market price".

Railtrack was the best-performing blue chip, speeding ahead 95p to 1,030p as interim profits prompted analysts to lift their projections for the year. UBS increased its estimate by pounds 15m to pounds 400m.

Another round of financial speculation was given a cautious reception. National Westminster Bank, said to have been re-targeted by Barclays, could only muster a 6p gain to 854p. Barclays fell 22p to 1,458p.

Lloyds TSB was ruffled by worries about its South American operations, softening 13.5p to 703.5p. Norwich Union, still the market's favourite insurance takeover play, gained 10.75p to a 363.75p peak.

Engineer Hunting fell 7.5p to 208.5p as Peel Hunt placed shares. Menvier- Swain, the electrical equipment group, duly collected its bid, gaining 41p to 302p. A US group Cooper Industries is offering 310p or pounds 165m.

Etam, where the French Etam Developpement is offering 135p a share, held at 133.5p as the bidder's stake moved above 50 per cent.

Molins, the tobacco machinery maker, suffered another mauling, falling 72.5p to 327.5 on the latest profit warning.

Thistle Hotels, where there is talk major shareholder Brierley Investments, is fretting about the weak share performance, was busily traded with three substantial trades at 152p. The quote ended at 153.5p. Cadbury Schweppes was firm at 591.5p as SBC Warburg said buy.

Newcomer Northern Recruitment, a jobs agency, moved to 125p from a 108p placing; Gyrus, making keyhole surgery equipment, was placed at 145p and ended at 147.5p.

Johnson Matthey, the metals group, dumped 34.5p to 559p as Merrill Lynch said sell; the gold price at a 12-year low left Lonrho off 6p at 90p.

Even so the prospect of a Devon gold rush lifted Ofex share Crediton Minerals 4p to 23p although parent, Minmet, was unchanged at 6.75p.

Taking Stock

Anglesey Mining rose 2.5p to 16.5p as drilling started on Parys Mountain, the Anglesey development which has been described as Britain's biggest metal mining project this century. Parys was mined in Roman times and in the last century was one of the world's biggest copper producers. The company also has gold and silver leases in mid-Wales. Its shares were 2.25p in August. They were floated at 70p nine years ago.

Security printer Da La Rue, riding at 1,052p in 1995, is bumping along at 396p. Credit Lyonnais Laing remains bearish and says sell. Hopes of substantial growth, it says, is "but the product of wishful thinking".

Verity, with wafer-thin speaker technology, added 2.5p to 73p as stockbroker Killik said buy.