Allied prepares to walk out of the last chance saloon; MARKET REPORT

Allied Domecq and, yet again, Zeneca dominated a stock market which at last appeared to be feeling the strain of its record-breaking exertions.

Indications a large programme trade had left stock slushing around the system coupled with the Dow Jones Average slipping below its just-achieved 6,000 points pulled prices lower, probably encouraging some investors to lock in a few profits.

But such negative considerations were lost on the booze and drug combination of Allied and Zeneca. Indeed Allied enjoyed a strong ferment of stories, pushing the shares 25.5p higher to 482.5p.

Bid action, preceded by a dawn raid today, was one. Seagram, the Canadian spirits group, was put in the frame.

There was also talk of management changes and the long suspected demerger, producing stand-alone retail and spirit companies, being announced. The deal with Bass over the Carlsberg Tetley brewing division was also an influence, with talk Whitehall was about to clear the takeover.

Another suggestion was Allied's top brass had lunched in the City, leaving an impression the group was performing better than expected.

But such stories were wide of the mark. It would be construed as particularly indiscreet if Allied enjoyed the City's hospitality with its results due next month.

There was, however, one possibly bullish development. Credit Lyonnais Laing, the securities house, was rumoured to have changed its stance on the shares - moving from hold to buy. It was said the house planned to issue a favourable circular today.

Allied has had a difficult time and it has been described as being "in the last chance saloon". Its shares have been such weak performers, coming down from more than 550p this year, that a supportive investment house could, just, be enough to provoke a such a flurry.

But with the market convinced Allied is set for dramatic changes under new chairman Sir Christopher Hogg, there must be a temptation to make sure any party is not missed.

Zeneca did not enjoy such a range of rumours. Just one - the perennial takeover story - was enough to lift the shares to a new peak, up 32.5p to 1,687.5p. Glaxo Wellcome is re-emerging as the favourite to strike, although Roche, the Swiss group, is never far from the speculation.

Tesco was another blue chip to buck the trend, although there was absolutely no suggestion of corporate activity. The shares rose 5p to 326.5p as NatWest Securities nudged its profit forecast a little higher and said the shares had become a buy. Rivals Safeway, enjoying UBS support, gained 4p to 354p.

Pilkington, the glass group, had a difficult session, falling 6.5p to 181p. The crack was prompted by worries about interim profits, due soon. The group has already warned that dull trading on the Continent was creating problems.

Tate & Lyle, the sugar group, turned sour, falling 13.5p to 483p. A US probe into alleged fixing of sweetener prices and cautious comments from SBC Warburg did the damage.

The FTSE 100 index slipped 26.4 points to 4,024.4 with the supporting Mid Cap index off 10.7 at 4,438.2.

Television shares, still anticipating a rush of takeover bids later this year, presented a bright picture with takeover favourites HTV and Yorkshire- Tyne Tees higher. But BSkyB fell victim to the general lethargy, off 12p to 664.5p.

DFS, the furniture chain, lost 22p to 514p as it became apparent margins were under pressure and the Kirkham family intended to sell more shares, another 22 per cent of the capital.

Ramco, the oil group, gained 44p to 705p on its link with Total and Mobil over its Azerbaijan development but the oil majors retreated again.

Princedale, the manufacturing and marketing services group, rose 2p to 35p as Hillsdown Holdings' departure from the share register was duly confirmed. Part of Hillsdown's 12.3 per cent stake has gone to Bentley International, described as an investment company, and three directors including Sir Harry Solomon. Spring Ram, the bathroom group, responded to share buying by its chairman, Roger Regan, with a further 1.75p gain to 14.75p.

VideoLogic added 3.5p to 57p as Merrill Lynch said buy and Micro Focus rose 60p to 1,020p on US influences.

Financial Publishing, embracing stockbroker Durlacher, added 15p to 265p following a sharp profits advance. The shares, placed last year at 38p, can claim to be AIM's top performer.