Market Report: Shares gain after quelling interest rate terrors

SHARES overcame their interest rate terrors. Despite a volatile New York opening, prices managed to remain in positive territory as world bond markets showed signs of settling down.

The much calmer atmosphere was illustrated by the market in government stocks, where there were gains of more than a point among long-dated gilts.

The FT-SE 100 index ended 13.7 points higher at 3,281.2 in steady trading.

End-account considerations and some 'bottom fishing' by the inevitable bargain hunters helped the recovery. Even so, it was a surprisingly good performance by blue chips in view of New York's continuing uncertainty and the Malaysian threat of trade sanctions.

Groups caught up in the Malaysian confrontation were obvious casualties. BICC, suffering the added discomfort of a Credit Lyonnais Laing downgrading, fell 14p to 436p and General Electric Co 5.5p to 319p.

John Laing, the builder, was also hit, off 13p at 385p. Rolls- Royce, another victim, fell 5p at 168p.

British Airways was another at a lower altitude although Malaysian influences did not loom large. It was US worries that did the damage, driving the shares 5p lower at 446p.

The British group's links with USAir, the American airline, are said to be under investigation by the US Department of Transportation, at the behest of American Airlines, one of USAir's main rivals.

It appears that American Airlines may have gone as far as asking the US authorities to overturn the deal under which BA and USAir pool passengers and facilities. American Airlines says the pact threatens the development of a free market.

After long and tortuous negotiations BA fixed up its USAir deal in January last year.

It pumped in dollars 300m, which can be converted into USAir shares at dollars 19.5. It is just as well BA still has three years to switch into shares because the USAir price has been in ragged retreat and is now around dollars 11.75.

The not unexpected Granada success in the battle for LWT (Holdings) had little impact on television shares, although Carlton Communications, on Robert Fleming Securities support, gained 28.5p to 945.5p.

LWT rose 6p to 731p and Granada edged ahead 1p to 562p.

The takeover has forced LWT's removal from the FT-SE 250 index. It is replaced by the Westland helicopter group, which is under takeover threat from the engineer GKN and may only survive as an index constituent for a short time. GKN already has 45 per cent of Westland, unchanged at 330p.

Insurance shares improved as the view took hold that this week's results had been treated too dismissively. Commercial Union rose 27p to 630p and Guardian Royal Exchange 5p to 213p.

Glaxo Holdings, up 8.5p to 685.5p, attracted buy recommendations, with Daiwa, the Japanese house, and Panmure Gordon among the stockbrokers recommending the shares.

United Biscuits, up 10p at 337p, was back in the takeover frame, with some speculators still banking on a Hanson strike; others, however, were looking at RJR Nabisco, the US food and tobacco giant raising dollars 2bn.

Another theory is that Hanson is near to buying the RJR tobacco interests. Hanson is in a money- raising mood with its Beazer sales and dollars 1bn US funding exercise. Its shares rose 3.5p to 278p.

Burton, the clothing retailer, managed another modest advance, 0.25p at 52p, on the management shake-up. It was one of the shares to resist Thursday's bloodbath.

Ladbroke, the betting and hotel group, edged ahead 3p to 202p. Year's figures, the first since the departure of Cyril Stein, creator and long-time chairman, are due next week. The market is looking for a figure near last year's pounds 147.9m.

Best performing share was little-known CCS, a builders' merchant. It shot from 1.5p to 10p. The company announced profits of pounds 1.5m against a pounds 10,000 loss. The swing was due to an exceptional credit that was known in August when it reported half-year figures.

International Communication & Data rose 1.5p to 14p. The PSB- led consortium that tried to take control last year, has shuffled its interests, with John Porter, son of Lady Shirley Porter and a leading member of the consortium, taking a 14.99 per cent interest, buying shares under option. He has options on a further 8 per cent and the voting rights on another block.

The PSB contingent is holding talks with David Cicurel, ICD's chairman, about bidding for the company.

AAF Industries rose 10p to 56p, following a boardroom shake-up that included the arrival of Raymond Hasson as chairman. The mini-conglomerate, with close South African links, plunged into the red last year and sold one of its main operations, a modular building group in the US, for pounds 22.3m.

Tepnel Diagnostics, which made a spectacular stock market debut in September 1992, when the shares were floated at 120p, has been outlining its attractions to City investors. Its shares closed at 185p. Like many of the new high-tech breed, Tepnel has yet to enjoy a profit but a pounds 1.7m loss this year will be followed by a pounds 1.1m profit, the stockbroker Allied Provincial believes.

Pan Andean Resources, the Rule 535-traded Irish company seeking oil in Bolivia, has raised pounds 300,000 through a placing with shareholders at 7.5p. The offer attracted subscriptions for more than pounds 600,000. Prospects are regarded as encouraging and PA, already linked with the Australian giant BHP, is near to fixing deals with other leading resource players. Its shares are 9p.

The FT-SE 100 index recovered from a 24.1-point fall to close 13.7 higher at 3,281.2 but the FT-SE 250 index fell 3.1 to 3,919.9. Turnover was 792.5 million shares, with 39,357 deals. The account starts on Monday with settlement on 21 March.

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