Metal trading group MG heads for pounds 200m float at 215p a share

Market Report

MG, THE German metal trading group, was seen as an 18-carat bet in the market yesterday amid talk that its Monday flotation will value the company at over pounds 200m.

Dealers' whispers suggest that MG, one of the world's leading independent metal traders, will be priced in the middle of its 200-230p range, at around 215p, giving its 100 million shares a total value of some pounds 215m.

According to the market talk, the MG offering - masterminded by Commerzbank, Cazenove and Lazard - has received a reasonable response from small companies' investors and specialist funds.

The three banks kept mum yesterday but rumour has it that a float at 215p will be seen as a minor success for MG's advisers given the recent tumble in the London market for small and medium-sized companies.

A market value of over pounds 200m should also keep MG's parent, the German industrial giant Metallgesellschaft happy. The unpronounceable conglomerate is planning to retain stake of around 20 per cent and wants to see its metals offshoot get off to a solid start.

The Teutonic industrialists could do worse than copying Kingston Communications. Since coming to the market in July, the Hull-based phone group has risen over 45 per cent. Yesterday it added another 51.5p to a record 428.5p amid talk of an impending strike or of a major deal. Dealers believe that Kingston is too small too survive in the tough world of mobile telephony and it will not be long before a UK or European rival shoots this sitting duck.

Colt Telecom, 25p higher to 1,230p and Energis, 33p lower to 1,467p were mooted as predators. Alternative rumours suggested that Kingston is about to clinch a media deal with a blue-chip group - possibly BSkyB, 2p lower at 585p. An alliance on pay-per-view and video-on-demand could be on the cards.

The telecom sector was further excited by confirmation of the much-rumoured float of Scottish Telecom by Scottish Power, 15.5p higher at 601.5p, and a further rise by BT, 26p better at 948p, still revelling in Thursday's deal with AT &T. Vodafone Airtouch rose 10p to 1253p on continued speculation of an imminent deal with Bell Atlantic.

The overall market had a confusing session as the expiry of future and options contracts clouded trading for most of the day. The FTSE 100 managed to finish 25.2 higher at 6039.8 - just above the psychologically important 6,000 barrier. The blue-chip index survived almost unscathed a flurry of derivatives-linked programme trades in mid-morning and put together a mini-rally in the afternoon as New York opened sharply higher.

The second liners also rebounded from recent slumps, with the FTSE 250 ending 15.9 better at 5,854.1 and the SmallCap edging 3.6 higher at 2,766.4.

Heavyweight stock HSBC helped to drag the FTSE 100 higher with a 27.5p jump to 742p. There is some talk that the Hong Kong bank's troubled acquisition of Republic New York could be saved by a report by accountants KPMG.

Rival Barclays shed 35p to 1,631p after being sued by mutual Nationwide over its cash machine charge. Insurer CGU jumped 20.5p to 970.5p on revived takeover rumours. Germany's Allianz is the tipped predator.

Mining group Billiton dug up a 9.5p rise to 250p after good results from Australian rival BHP and vague bid talk.

Building materials group Hanson, 14p higher at 473p, benefited from a sector rebound and talk of acquisitions. Wild rumours pointed to Rugby, 3p higher at 103p, as a target. However, the cement maker, results next week, is more likely to be bought by a European competitor such as France's Lafarge.

Retailers were on the cut-price shelf as John Lewis poor figures heightened fears of a slowdown in consumer spending. GUS plummeted 24.5p to a near five-year low of 561p on concerns over trading at Argos, while Debenhams shed 10.25p to 319.75p on talk that the warm autumn weather has kept shoppers away from the high street.

Stagecoach fell 7p to 184p on its imminent exit from the FTSE 100. Concerns over a bus strike in Manchester also depressed sentiment although the company said that losses will be minimal.

Dairy group Unigate milked a 30p rise to 355p after denying rumours of a loss of its contract to supply Tesco, while rail engineer Jarvis soared 18p to 280p on revived talk of a major contract with Railtrack, 3p lower at 1,176p. Computer specialist Parity climbed 31.5p to a yearly peak of 265.5p on vague talk of a bid or a large contract, just like paper group Arjo Wiggins, 11.75p higher at 195p.

Pharmaceutical group Medeva plunged 36.5p to 132p after rejecting a bid, possibly from rival Elan, 22.5p lower at 2002.5p. A hostile strike is now rumoured.

Carpet maker S Lyles rolled out a 14p rise to 58p after receiving a 60p- per-share management buyout bid, while IT group Kalamazoo beamed 9.5p higher to 80p after a deal with IBM to build car computers.

Benson Crisps crumbled 4p to 50p after a poorly-received puff on Channel 4's "Show Me The Money" programme.

SEAQ TRADES: 100,301

SEAQ VOLUME: 1.03bn

GILTS INDEX: N/A

INTRIGUING takeover whispers are swirling round the Israeli-based superstock BATM Advanced Communications. The high-speed data specialist could have caught the eye of two US rivals; dealers say 3M and Cisco might be interested. Shares have soared from 153.5p at the start of the year to yesterday's 2,582.5p. Further upside is likely if, as rumoured, the interims due out in two weeks bring some major deal.

KEEP AN eye on the property minnow Newport Holdings, unchanged at 127.5p. The company said yesterday that the holders of 45 per cent of its shares rejected a hostile bid from investment vehicle Trefick. Newport is believed to be lining up an alternative deal with a rival real- estate group. The company has had talks with rival Ashquay, flat at 29p yesterday, but the rumoured deal is not thought to involve that company.