Market Report: Banks and insurers lead rise on US hopes

MONEY shares led the stock market higher, with banks starting to anticipate the summer results season and insurance companies drawing support from indications of a more optimistic US outlook.

Hopes are starting to run high that more evidence will emerge that the banking crisis, which has left some members of the banking community looking woefully inept, is at last beginning to ease.

Particular attention will be paid to Barclays, which plunged into losses largely because of its extensive property exposure, and National Westminster. The recovery at Midland Bank, now part of HSBC, is likely to have continued.

Lloyds Bank, which has fared better than its rivals, kicks off the interim profits season and should indicate it is heading for a record pounds 900m for the year. Barclays will be in the black with, perhaps, pounds 600m in sight for the year and NatWest should double profits to pounds 810m.

Barclays and NatWest reached new highs for the year, with Barclays up 11p to 483p and NatWest 7p to 491p. HSBC improved 3p to 667p, and Lloyds 10p to 580p.

TSB Group was at one time up 4p, as rumours swirled that it was at last about to complete the sale of its Hill Samuel merchant banking arm. A price of pounds 500m was mentioned, with BAT Industries, the tobacco and financial services group, put forward as the likely buyer. But doubts set in and TSB ended 2p firmer at 195p. BAT, suffering from profit downgradings after the US tobacco setback, fell 2.5p to 419p.

Many observers feel that once the troubled Hill Samuel group is sold, TSB could find itself in a predator's sights.

The insurance sector, also reporting next month, drew strength from analysts' visits to the US. Most came to the conclusion that transatlantic prospects were improving. It was enough to push Commercial Union 14p higher to 615p and General Accident up 19p to 623p.

The rest of the market again feasted on hopes the Bundesbank will at last get around to cutting interest rates when it meets today. The FT-SE 100 index rose 14 points to 2,900 and the second-line FT-SE 250 index pushed on to yet another peak, up 6.6 to 3,235.7.

The poor response to the Government's pounds 3.25bn gilts auction - just 1.1 times subscribed, had threatened to retard the market's enthusiasm. But the eternal interest rate hope and a favourable response to Hanson's quantum US leap - the dollars 3.2bn agreed acquisition of Quantum Chemical - ensured an upbeat performance.

There was also an element of window dressing as the first half of the year ended.

Chemicals continued to reflect the deteriorating outlook. Courtaulds, with the added strain of US selling, dipped 5.5p to 561.5p.

Guinness drew a little strength from the Japanese decision to reduce the tariff on Scotch whisky. However, the reduction is thought to be insufficient to have much impact. Guinness rose 6p to 471p and Highland Distilleries 10p to 338p. But Allied-Lyons, reflecting disappointment with the price its Chateau Latour commanded, fell 3p to 537p and Grand Metropolitan, the other leading spirits group, lost 2p to 428p.

BT improved 5.5p to 428.5p, reflecting the BT3 investment roadshows. US presentations are due to start.

British Steel fell 2.5p to 94.5p. NatWest Securities apparently did the damage, selling stock as the market closed. There are worries that BS's latest price increase - its third this year - may not be holding. The shares recently reached 106p.

Television shares lost some of their LWT Holdings-inspired exuberance, but Scottish TV romped on, gaining another 21p to 545p.

Geest, the food group, continued to advance following the EC banana quota ruling and lurking takeover hopes. The shares rose 10p to 394p.

The newcomer Devro International, a sausage-skin maker, ended at 193p against the 170p issue price. But Ascot Holdings, the old Control Securities, suffered the expected drubbing when the shares returned after a 20-month suspension. They opened at 5.25p, reaching 6.5p. The suspension price was 16.5p.

In its halcyon days the brewing, hotel and property group, created by Nazmu Virani, brushed 260p. Another former high flyer, Brent Walker, ran into heavy selling, falling 2p to 7.5p.

Whitbread 'A', seemingly encouraged by the sunshine, jumped 9p to 506p. Mansfield Brewery, down 11p to 819p, was said to have been hit by sell advice.

Starmin, the aggregates group, stumbled 2p to 2.75p as the dividend was cancelled and the Abdullah brothers withdrew from running the company.

Ratners, the jeweller, was another actively traded share. Its results and reorganisation left the shares 3p higher at 35.5p, with Seaq putting volume at 19 million shares.

Birkdale, the advertising group where a marketing acquisition is near, rose 1.5p to 14p.

BM, the troubled engineering group, fell to 16p, closing at 17p, down 2p, as a large line of stock hovered before being taken up. Pittards, the leather group, was the latest to produce a profit warning, leaving the shares 11p down at 60p.

The FT-SE 100 index ended at 2,900 points, up 14, and the FT-SE 250 reached another high, 3,235.7, with a 6.6 gain. Turnover was

550.4 million shares with 28,598 bargains. The account ends tomorrow with settlement on 12 July.

Changes could be under way at Windsor, the insurance broker specialising in sport and leisure. Rutland Trust, the financial group, has in effect acquired an option over 26.2 per cent of the capital from Channel Hotels and Properties, which has steadily built its stake. Property provisions pushed Windsor, seen as a recovery situation, into the red in its first half- year. The shares held at 18p.

Grosvenor Development Capital, a venture capital group, has hit the jackpot with Celsis International, due to arrive on the market later this month. In the past year it invested pounds 383,000 in Celsis shares. The 100p Celsis placing produced pounds 427,000 for Grosvenor and it is still sitting on nearly 5 million shares. The market expects Celsis to open at about 130p. Grosvenor shares rose 25p to 126p.