Fly-away Rolls benefits from hopes of overseas orders

Rolls-Royce, the aero engine group, led the latest blue chip charge with Footsie moving to within 18.5 points of its high. While many shares were responding to Budget hopes Rolls was flying high in anticipation of more lucrative overseas contracts.

Much of the excitement stemmed from US possibilities. Two groups, Boeing and Lockheed Martin, have battled through to be short-listed for the shoot- out to win the pounds 100bn battle to provide the next generation of US and British fighter bombers. Which ever of the surviving groups emerges victorious, Rolls, with its vertical take-off expertise, will help build the engines.

It should also score from US plans to revamp the B52 aircraft. There is wide-spread support for recreating the B52. The work, likely to be undertaken by Rolls and General Electric of the US, could be worth pounds 3bn. As a modest front runner to the possible US riches Rolls announced it had won an pounds 8m order to provide generating equipment for an Egyptian chemical plant.

The group's booming order book - it has captured a succession of contracts in recent months- provided further thrust to the shares, sending them 10.5p higher to 257.5p.

The Rolls performance helped Footsie climb 35.9 points to 4,054.6, a 100-point surge in two trading days. Again there was evidence the market had been caught short of stock and price movements were often exaggerated. Even so, after a lacklustre run, blue chips have suddenly come alive; whether their new-found exuberance will survive today's Kenneth Clarke test remains to be seen.

Drink shares, on stories the Chancellor was at last prepared to bow to pressure to counter the cross Channel bootlegging and cut excise duty, were strong. Guinness, up 10.5p to 457p, led spirits and Scottish & Newcastle was the beer front runner, 8.5p higher to 648p. Banks and insurers were other Budget beneficiaries. But Eurotunnel continued to suffer from last week's fire, off 5p at 81p; British Steel and Redland were among those suffering from sterling's strength.

British Airways was lowered on uncertainty over the American Airlines link.

Oils had a mixed session with the resumption of Iraqi supplies taking the shine off the sector. Enterprise Oil, at one time up 18.5p, ended 1.5p off at 577.5p. Glaxo Wellcome rose 26.5p to 1,003p following ABN Amro Hoare Govett support and Rank Group put on 7.5p to 423p ahead of a presentation at Henderson Crosthwaite.

Hillsdown Holdings improved 4.5p to 178p following a meeting with Nat West Securities. Transport Development was unchanged at 181p after meeting analysts.

The expected action among broadcasters following the Carlton Communications swoop on unquoted WestCountry Television, failed to materialise. Even long-running takeover favourite HTV gave ground, off 2p at 356.5p. Among those to edge coppers higher were Border and Yorkshire-Tyne Tees.

Despite moving into profit ML Laboratories, the drugs group, fell a further 24.5p to 245p. The market was puzzled by the appearance of two determined sellers. Biocompatibles International, developing coatings for heart valves and optical lens, continued to score on the back of the Kleinwort Benson enthusiasm, gaining 42.5p to 745p.

Grantchester, the latest spin-off from the Burford property group, touched 133p, closing at 128p. Asset value of the warehousing company is put at 91p. Another newcomer, Access Plus, a marketing services group, hit 107.5p from a 90p placing.

Inn Business, the pubs chain, duly rolled out its take-over offer - a pounds 30.2m bid for Sycamore Taverns. Ashbourne, a nursing homes company, rose 22p to 161p following a bid approach. Sun Healthcare, a US group, sits on 29.2 per cent and looks the most likely predator.

Hercules, a property services business hived off from the Safeland property venture, jumped 33p to 83p following a profit surge from pounds 31,000 to pounds 390,000 and the acquisition of a pounds 407m insurance contract.

Azlan, a computer group, lost 39p to 576p. The shares have fallen sharply in a week and are now below the 620p at which the company is making a pounds 48.5m rights issue. Part of the cash is earmarked to take over Akam, a Dutch group specialising in computing training. The market seems to have been unsettled by the company's comment that trading was only in line with expectations. SBC Warburg is the rights underwriter.

Wace, the printer, created interest, gaining 3p to 75.5p.

Taking Stock

Shares of Emerald Energy, which has raised pounds 7.5m from institutions and is pulling in a further pounds 4m from a placing and open offer to explore for oil in Colombia, are already underpinned by the group's US operations, says researchers David Williamson Associates. The company has two Colombian prospects and any drilling success would lift the shares but DWA say there is room for steady improvement on the back of the US operations. Emerald is 2.5p.

Highams, a supplier of IT products, is on its way to AIM. Teather & Greenwood is the adviser and broker.

Cybertec gained 4p to 13p on Ofex. The multi-media group has clinched a distribution alliance with Anglo Corporation which has an option to take a 10 per cent stake.