Market Report: Well-oiled Footsie comes up with a modest rebound

FOOTSIE yesterday managed a modest rebound from Thursday's plunge, helped by the oil sector, one of the market's great recent underperformers.

The battered oil stocks enjoyed an unfamiliar surge on the back of Thursday's jump in the price of crude. A few traders must have thought they had had one too many at lunch as they stared at the leaders' board. There they were, the great casualties of the oil price slump, revelling in their new status of big risers.

Shell, fresh from its tie-up with rival Texaco, led the advance with a 9.6 per cent rise to 361.5p. Merrill Lynch lent a helping hand, advising clients to switch from Exxon into the Anglo-Dutch giant. Enterprise Oil was not far behind, drilling a 25.5p advance to 350.5p as the firmer oil price mixed with vague talk of a bid from the Italian group ENI. BP was also in good form, rising 4 per cent to 767p.

Even Lasmo, the oil explorer which has had a torrid time of late, posted a 4p rise to 158p. Shame that the increase came far too late to avoid an almost-certain relegation from the Footsie next week. The extractors' good performance was capped by Billiton: the mining group dug a 7.9 per cent rise to 122p on optimism about Monday's results.

The mid-cap explorers did not disappoint either, with Cairn Energy firming 8p to 114p, British Borneo up 13.5p to 240p and Premier Oil 5 per cent higher at 26.25p. Soco, the exploration minnow, jumped on the bandwagon and soared 43 per cent to 68p. And the beautifully-named Pan Andean added an AIM contribution to the party, rising 22 per cent to 11p, after announcing that it will soon start drilling in Bolivia.

This well-oiled bonanza helped the Footsie to snap the recent trend and decouple from Wall Street. The benchmark index finished 48.3 points higher at 5,167.0, even though the American index was in the red when London closed. The undercard had a reasonable day too, with the mid cap finishing up 14.5 at 4,663.3 and the small cap creeping 1 point higher at 2,069.2.

AB Food was one of the few stocks to break the oil dominance in the Footsie's upper echelons. The food producer, famous for its defensive status, rose 37.5p to 522.5p. The Sets system could have played a part in this surge, as a trade with a daft spread went through at 524p when AB was bumbling along at 501p.

Other food stocks had a rougher ride. Asda and Tesco were hit by a big sell order. Dresdner Kleinwort Benson was rumoured to have gone through with two large "bought trades" at below market prices. The deals left Tesco 6p lower at 167.5p and Asda 1.5p worse off at 186p. DKB was also active in Sainsbury, this time above the prevailing price. The stock firmed 4p to 528p.

Orange was in demand, as Merrill Lynch said " accumulate" and slapped on a 1,200p 18-month share price target. DKB also weighed in in favour of the mobile phone group and the shares closed 23.5p higher at 573.5p.

Royal Bank of Scotland was among the blue-chips on a downward slope. The high-street lender took a bit of a battering as traders feared that it had overpaid Bank of Ireland for its stake in US bank Citizens. The shares ended down 21p to 824p, while Bank of Ireland fell 10p to 900p.

A similar fate befell Senior Engineering, which topped the list of mid cap losers with an 11 per cent slide to 139.5p. Negative broker's comments on the results were behind the damage. The upmarket insurer, St James's Place Capital, where the Prudential is a substantial shareholder, was also on the receiving end of some selling. The stock fell 24p to 266.5p after industry figures showed a decline in sales of personal pensions - St James's speciality.

Corporate developments provided some excitement among small companies. UPF Group, the car parts engineer, motored ahead, putting on 20p to 110p after a management buyout team offered investors 112.5p a share to take it private.

TLG, the former Thorn Lighting Group, surged 11.3 per cent to 166.5p after agreeing a 160p-a-share bid from Cooper Industries of the US. Rumours of a counter-bid from Wassall spiced up trading.

David Brown, the gears and pumps maker, moved up 36.5p to 36.5p after the US group Textron launched a 290p-a share-cash offer.

On the negative side of the small cap, European Telecom, a mobile phone handset distributor, was savaged by a profits warning. The shares shed 38 per cent to close at 142.5p after the company said that exposure to emerging markets would curb profits.

Litho Supplies fell 9.5p to 153p after the printing materials group warned of "difficult conditions" in the second half.

SEAQ VOLUME: 883.9m

SEAQ TRADES: 50,363

GILTS INDEX: n/a

AUGUST was a pretty dismal month for fledgling companies. The junior Alternative Investment Market index fell around 7 per cent in the month, reports stockbroker Durlacher's latest AIM bulletin. The worst performer was electronics group Selector, which lost 94 per cent to 2.5p after a profits warning. Brightest light was Fieldens, a maker of tractor tyres, which more than doubled in value to 74p after two former Hanson directors bought a 30 per cent stake.

CHORION has enjoyed a thrilling two days. The company, which owns the right to works by Agatha Christie and Enid Blyton, soared 16.7 per cent to 17.5p. Good results on Thursday were followed yesterday by directors' share buying. Viscount Astor, a tourism minister in the last Tory government, spent pounds 170,000 to buy 1 million shares, while the chairman, John Conlan, bought 195,000 for more than pounds 29,000. Managing director Nick Tamblyn spent pounds 15,000 for 100,000.