National Power surges ahead with help from NatWest

MARKET REPORT

NatWest Securities is emerging as the utilities' friend. A day after the investment house put the signals at green for Railtrack it gave another utility, National Power, a powerful push.

National Power fell on Wednesday on disappointment with its figures. Ian Graham at NatWest clearly believes the stock market got it wrong.

Profits, after exceptional charges, were little changed, the dividend in line with expectations and "we continue to believe that the current yield fails to value the likely income stream", he said.

National Power was the best-performing blue chip, almost recovering the profits-inspired fall with a 17p gain to 452p. And Railtrack continued its remarkable progress, advancing a further 10p to a 354p peak.

Other utilities made progress, ironically on the day the Commons debated the Labour Party's proposed windfall tax.

PowerGen was up 9.5p to 588p; there was a sprinkling of gains in the water sector and London and Yorkshire brightened on the electricity pitch.

There was, however, some doubt whether NatWest could claim full credit for National Power's surge. A story has been bobbing around the market for weeks that Shell could descend on one of the generators, with National Power seen as the more likely target.

Shell, and to a lesser extent British Petroleum, is currently the market's bidder for all seasons. And the general view is any bid will be a mega affair with a high chance a utility will be the target.

British Gas is another accorded the distinction of Shell interest. Talk of corporate action, with Shell as the favoured predator, had drifted rather lazily around until excitement was generated by weekend reports of a deal.

After flaring 24p to 232.5p, British Gas has subsided, closing 6.6p lower at 222p as not even the slightest hint of Shell interest has been discovered.

Shell and the other leading oil shares gave ground, unsettled by rumours a shipping company had defaulted on a contract. Shares of Shell lost 10.5p to 981p and BP 6.5p to 678p.

The rest of the market suffered another session of Budget-inspired inactivity, drifting aimlessly. Footsie ended 9 points down at 3,953.8.

The malaise is even more pronounced among second and third liners. Dealers are finding it increasingly difficult to trade lines in medium and small companies. "There are no takers. The system has come to a halt," complained one stockbroker. The FTSE supporting 250 index closed 3.2 down at 4,397.

Besides the Budget uncertainty, the market remains unsettled by higher interest rate fears and sterling's strength. Government stocks were, however, encouraged by the pound's performance scoring gains of up to pounds 11/16th.

Guinness was pulled another 6p higher to 445.5p. Cazenove was said to be positive and the LVMH share sale story, never far below the surface, emerged again. LVMH has 21 per cent of the spirits and stout group and, according to popular theory, is busy sounding out institutions about selling all or part of its stake. The LVMH holding is worth around pounds 1.7bn, which would represent a huge swallow for a market in such subdued form.

RTZ, helped by the firmer copper price, made more headway, reaching 964p, up 22p.

There was, briefly, a buzz of excitement around Cable & Wireless. A trade of 115 million shares at 476.5p was printed. The market was perplexed. Stake building ahead of a bid? Before thoughts could be put together, it was admitted the deal had been overstated; it was, in fact, a much less startling 115,000 shares. The mistake seemed to sum up the perverse state of the market. Cable shares ended 5.5p down at 476p.

Inspirations, the holidays group, lost a further 4p to 68.5p on worries it was encountering more trading difficulties but newcomer Snakeboard ended at 3.75p from a 3p placing.

Maid, the on-line information group ruffled by cash call fears, recovered 19p to 249.5p on talk of a collaboration deal with a Japanese group.

NSM, the coal and plant hire group, crashed 19.5p to 23p on a warning of losses and Baldwin, the restaurant chain, fell 12.5p to 117.5p.

Reflec, which has developed a novel technology to make reflective inks for clothing, gained 5p to 129p. The group, which arrived on AIM at 40p a share in April, is placing 560,000 shares at 125p (7.37 per cent of the enlarged capital) through stockbroker Peel Hunt. The pounds 690,000 proceeds will be used for working capital.

Taking Stock

International are looking decidedly sick. The diagnostic research group is striving to identify protein markers as a way to diagnose BSE in live cattle and working on a patent for identifying CJD, the human equivalent of mad cow disease. Its shares, 180p at the start of the year, have fallen to 37.5p

Jarvis is back in the take-over frame. The shares jumped 10p to 133p. A bid from Amey is thought likely. Both have railway maintenance companies. One suggestion is Amey could bid with Barratt Developments which would take the Jarvis construction side.

Car Group, a second hand car dealer trading as Car Supermarkets, is coming to market. Shares are being placed at 138p.