US rate fears set Footsie on a roller-coaster ride

MARKET REPORT

It was an astonishing, volatile session for shares. At one time the FT-SE 100 index was posting a 29.4 gain, representing a 75.9 advance since the start of trading on Thursday.

Then the dreaded US employment figures appeared. Once again they showed the US economy was moving ahead. But that was not what stock markets around the world wanted with the obvious implication that transatlantic interest rates would be pushed higher.

New York slumped; so did other markets with Footsie at one time down 31 points. By the close shares had got their second breath and the index was off 17.4 at 3,743.2.

The roller-coaster ride did not encourage much trading. Once again investment activity was moderate with much of the swings due to the defensive sensibilities of market makers.

Government stocks weakened, unsettled by the ragged retreat of US bonds.

The US-inspired threat of higher domestic interest rates left building shares feeling the pinch. Banks and composite insurers were victims of US bonds with only Bank of Scotland resisting the downward tug. It was encouraged by next week's marketing for the sale of insurance group Standard Life's 32.3 per cent stake. The shares rose 5p to 241p after touching 249.5p.

Life insurers resisted the slide. Pearl Assurance, controlled by Australian Mutual Provident, has agreed a deal with the Department of Trade & Industry over its so-called orphan funds. It should result in a bonus, split between policy holders (90 per cent) and shareholders (10 per cent). Legal & General, up 6p at 672p, has already concluded a similar deal.

But the insurers still talking to the DTI sprang to life, completely ignoring such considerations as American employment numbers. Britannic jumped 43p to 766p and Refuge 15p to 473p. United Friendly, which had already arranged an orphan deal, rose 20p to 765p

Liberty International, the insurer, eased 3p to 357p as Minorco was confirmed as Thursday's seller. It sold an effective 5 per cent stake to SBC Warburg and UBS.

Zeneca had another active session with the shares climbing 23p to a peak of 1,464p. US approval for its Kadian capsules for morphine doses seemed to be the major influence.

Other blue chips higher included BSkyB, the satellite television station, up 9p to 453p, on reports it had produced new digital specifications and a nudge from Warburg.

An upbeat trading statement helped Redland, the building materials group, to muster a 6p gain to 408p with RMC pulled 14p higher to 1,450p.

Pearson encountered selling, down 15p at 642p; Mirror Group and United News and Media felt the impact of the latest hostilities in the newspaper price war with Mirror off 3p at 203p and United 4p at 666p. British Airways shrugged off the threatened pilots strike, gaining 2p to 538p.

Eurotherm recovered 29p of Thursday fall, closing at 544p.

Manchester Utd slipped 7p to 455p as rumours swirled around the City that finance director Robin Launders was signing on for Leeds Utd, now controlled by Caspian, the media group.

Conrad, back from suspension after failing to capture Leeds, traded at 4p, down 1.25p.

Upton & Southern, the department stores group rescued by ex-Texas do- it-yourself chief Ron Trenter, held at 3.75p. There is talk it is on the verge of clinching the takeover of a well known store.

Chepstow Racecourse held at 1,110p. Stan Clarke, chairman of the St Modwen property group and owner of Uttoxeter and Newcastle racecourses, has lifted his stake to 12.85 per cent, buying 13,150 shares. He has held an interest in the Welsh course since 1994, the year when he bid unsuccessfully for United Racecourses, owner of Epsom, Sandown and Kempton.

Belcanto, a supplier to support vessels for the offshore oil and gas industry, is paying a special dividend of 20 cents a share, enough to lift the shares 3p to 46p.

Dring's of Bath, a specialist stonemason floated by stockbroker Ellis & Partners, traded on AIM at 4p against a 3p placing.

Electronic Data Processing held at 89p. Stockbroker Albert E Sharp regard the shares as a sell. It believes that given the company's record of undershooting forecasts the shares look fully valued even if it does stage as modest recovery next year. Analyst Richard Lucas is looking for pounds 2.5m (against pounds 2.9m) this year with pounds 2.7m next.

TAKING STOCK

r What is going on at Ennemix, the aggregates group? The shares rose 3p to 51p as 100,000 were snapped up at 50p. On Thursday Lafarge, the French group, mounted an agreed 46p a share bid. There was speculation Redland, which has 41 per cent following an unsuccessful hostile bid two months ago, had decided to return to the fray. Its offer was 35p. Lafarge has built a 41 per cent shareholding.

r English National Investment Co, where Bahamas-based investor Joseph Lewis has a significant influence, jumped 14p to 96p.

There was talk of an investment presentation for Auto-Nomy, with Internet text searching technology, where ENI has an option on 20.1 per cent. BCE, also involved in AutoNomy, edged forward to 19.25p.