Market Report: US influences provoke another share tumble

SHARES wilted again. Just as it seemed the stock market had settled down after this week's hysteria the FT-SE 100 index suddenly collapsed, transforming a 14- point gain into a 53.3 loss at 2,966.4.

Once again US influences provoked the retreat. Revised figures pointing to increasing inflation reawakened fears of yet higher interest rates with the consequent near-panic reaction in the futures market.

Although shares in New York treated the latest US statistics with the contempt they almost certainly deserved, the London market, already trading down in anticipation of the bank holiday, was marked sharply lower. But trading was again thin with most institutions content to sit on the sidelines.

Even so, this week's debacle carries some harsh, even dispiriting, messages. The index fall is the sharpest weekly decline since the crash of 1987. And it is now at its lowest since August.

Such a reversal has reinforced worries about the stock market's direction. Talk of a 2,500 level, derided as absurd pessimism only a few days ago, now commands an attentive audience. Most, however, fret about 2,800, a level that has attracted at least one strategist for two years.

However, it should be stressed that trading this week has been pathetically thin. Turnover, as recorded by Seaq, has been only 2.8 billion shares, representing an almost astonishing indifference by institutional and private shareholders.

Still, the slump to below 3,000 is bound to have repercussions. Chartists will no doubt find new, lower support levels to promote. But much more important is the impact the fall below 3,000 will have on some influential investors, particularly overseas.

Some will, no doubt, be forced to rethink. They may, once such an important crutch has been snatched away, quickly become disillusioned with the London market.

One leading casualty was Portals, the banknote group. De La Rue's decision not to pursue its takeover ambitions sent Portals crashing 135p before settling for a 112p fall to 653p. De La Rue rose 14p to 843p.

Eurotunnel moved ahead 11p to 359p, reflecting relief that the long-signalled rights issue achieved a moderately favourable initial response.

Hobson was, however, a big disappointment. The former toiletries tiddler returned after its dramatic takeover of the CWS's food manufacturing side. At one time there had been expectations of a 35p comeback.

But the market weakness and some disenchantment with the deal had pulled hopes back to an at-best 29p. In the event the shares opened at 25p, then fell to 22.5p.

Associated British Foods' pounds 18.9m Bakers Oven sale to Gregg, the bakers, left the shares off 12p to 543p. Gregg rose 12p to 805p.

Shoprite, the food discounter, remained under pressure following its poor figures and cautious comments. The shares lost 10p to 80p, a two-day fall of 64p.

Tottenham Hotspur remained in the doldrums on worries about Football Association sanctions, holding at 84p.

Exploration Co of Louisiana continued to bubble on hopes that it has made an impressive oil strike off China, edging forward a further 3p to 103p.

Bluebird Toys, in its slimline form, was another to resist the downward tug. Smith New Court buy advice pushed the shares 7p higher to 204p. English China Clay drew strength from James Capel support, up 7p to 420p. Its construction materials offshoot, Camas, is being demerged with trading due to start next week.

Boots' pounds 94m sale of its Farleys baby food side to H J Heinz left the shares 15p down at 509p. Thorn EMI was little changed at 1,025p after selling 60 per cent of its security operation for pounds 38.6m.

Life insurances were particularly weak, with Legal & General down 23p at 408p.

Builder Taylor Woodrow slipped 3p to 147p. At the yearly meeting it said it no longer intended to capitalise interest and was looking for 'reasonable' profit growth this year.

Proudfoot, the recruitment group which appears to have stamped on a move to launch a management buyout, fell 6p to 68p.

Standard Chartered, the banking group, remained at 231p. NatWest Securities like the shares, which have underperformed. It says the group's dividend-paying capacity is 'outstanding' and it is well-positioned to score from the fast-growing Asia-Pacific region.

The FT-SE 100 index crashed 53.3 points to 2,966.4 and the FT- SE 250 index 44.1 to 3,572.3. Government stocks weakened by pounds 3 4 . The account ends on Friday with settlement on 13 June. Turnover was 569.8 million shares with 26,048 bargains.

Stockbroker Dunbar Boyle & Kingsley, specialist in the growing but still backwater 535 share market, is planning to launch an investment trust that concentrates on 535 traded shares. Details should be announced within a month. The trust's shares will be traded on 535, which DBK joined last month. The broker researches 50 backwater shares but will soon lift coverage to 120.

Capital Industries, where Rutland Trust is a big shareholder, held at 160p as Smith New Court upgraded its profit forecasts. Analyst Tim Steer is looking for pounds 5m this year and pounds 6.1m next. Capital's main subsidiary is Samuel Jones, a packaging group where trading is said to be encouraging. The group's shares have swung from 230p to 60p in the past year.

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