Market Report: Bulls boosted by futures buying

FUTURES buying and hopes of an interest rate cut in Germany gave shares a warm glow yesterday.

The market was unperturbed by Tokyo's overnight fall and the end of the trading account. With New York open for a half day only, trading volumes were moderate and sellers thin on the ground. There was even some talk of stock shortages from traders.

A large buy programme by NatWest Securities provided the FT-SE 100 index with a good start, attracting bargain hunters in its wake.

By lunchtime, the FT-SE 100 index was sporting a 30-point advance. Although it gave up some of the gain later, the bulls maintained an upper hand. The index closed 18.3 higher at 3,111.4.

Brewery stocks were in bubbly mood. The sector has been attracting interest because of its above-average yield and modest rating.

Allied-Lyons, the food and drinks group, climbed 12p to 585p as Kleinwort Benson told clients to buy the shares. The firm was also keen on Whitbread, 15p better at 533p.

Guinness frothed up 9p to 450p while Bass, the pubs and hotel chain, was 2p ahead at 479p.

Bargain hunters were also active among retailers. A strong push from Panmure Gordon lifted Argyll, the Safeway supermarkets chain, 4p to 263p with more than 2.5 million shares changing hands.

Marks and Spencer raced ahead 9p to 420p while Next, the fashion retailer, jumped 5p to 188p.

A upbeat annual statement from Lloyds Chemists, the pharmacy chain, pushed shares 10p higher to 420p after the company said trading had improved since October and overall sales were growing 14 per cent. The news also helped Boots, its rival, which rose 9p to 534p.

However, oil stocks fell in the wake of a plummeting Brent crude price. Earlier this week Opec, the oil exporters' cartel, failed to agree on a cut in production levels.

Lasmo, the struggling oil independent, slumped 11p to 117p amid growing concern that its 2p final dividend was under threat. With the company saddled with huge borrowings and high operating costs, there is a growing fear that it will pass the dividend to stem a cash outflow.

Last month, it is understood to have turned down an estimated pounds 100m offer from a German gas company for its 36 per cent stake in Markham, the North Sea field.

Enterprise Oil eased back 2p to 437p. British Petroleum sagged 7p to 326p while Shell was 6p down at 688p. A stock overhang at Burmah Castrol, the lubricants group, sent shares 9.5p lower to 332.5p.

Hopes of an improving price for ethylene, a chemical feedstock, lifted Imperial Chemical Industries 3p to 722p. Some analysts believe the European chemicals industry is soon to set up a fund to reduce ethylene overcapacity. But the plan, disclosed by the Independent, was blocked by ICI this week.

Euro Disney, the theme park operator, rallied 20p to 350p as traders in London and Paris accumulated the shares to close positions. But the shares could come under renewed pressure next week.

United Biscuits, the snacks maker, eased 2p to 333p after NatWest Securities downgraded its pre-tax profit forecast from pounds 170m to pounds 178m for this year and from pounds 210m to pounds 190m for next.

But Eidos surged 60p to 193p on news that it was licensing its video technology to On Line Information, a company joining the USM next week.

Virtuality, the virtual reality games company, rose 7p to 266p while Perpetual, the fund manager, was buoyed 49p to 790p on the back of a threefold jump in profits, reflecting strong unit trust sales.

Royal Bank of Scotland sprinted 9p to 384p on hopes of strong full-year figures next week.

Futures buying and stock shortages, despite a half-day trading on Wall Street, pushed the FT-SE 100 index up 18.3 to 3,111.4. The FT-SE 350 rose 8.1 to 1,550.5. Trading volume was 697.6 million shares. The account began on 15 November and ended yesterday. Settlement is on 6 December.

Watch out for Pharmaceutical Proteins, being groomed by UBS for a stock market flotation next year. The company, based in Edinburgh, is developing a drug from the milk of sheep, goats and cows to prevent blood clotting in humans. The technique, which uses genetic science, was pioneered at the agricultural college in Edinburgh. The company may be valued at pounds 40m on debut.

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