Market Report: Doubts about rate cuts push down index

THE appointment of 'steady Eddie' George as Governor of the Bank of England was given a far from enthusiastic reception by the stock market yesterday.

The suspicion that interest rate cuts will be harder to achieve under the George administration left the FT-SE 100 index down 9.3 points at 2,771.9 in unexciting trading.

Mr George, recognised for his commitment to holding down inflation, is said to have opposed many recent interest rate cuts and his elevation left many wondering whether the policy of declining rates, seen as essential to nurse the still tender economic recovery, will be sacrificed in pursuit of inflation ambitions.

Other indicators were favourable. The Confederation of British Industry is talking about confidence at its highest for five years and the influential Minet Consultancy Index, measuring the liquidity of 12 leading institutions, suggested City confidence had reached a new high.

Ian Chalmers, who produces the index, said institutions had driven shares higher in the past year but with their resources becoming increasingly stretched it was now up to private investors to provide the momentum.

Bank and building society deposits still exceed pounds 350m. A 5 per cent switch could, therefore, inject about pounds 17bn of personal sector savings into the UK equity market.

There were signs that private punters, so evident in recent weeks, were still chasing their favourite shares. Volume dipped below the important 500 million level but trading outside FT-SE 100 stocks was still the most important influence.

But the heavily indebted leisure group Brent Walker, last week's punters' favourite, fell 4p to 12p in busy trading as it became apparent there was little, in the short term, to justify running with the shares.

However many other tiddlers made headway, even Pepe Group, the jean maker, forced to go private.

Leaders had a lacklustre session, with drug shares still reflecting worries over the impact of the Clinton administration on health spending and feared cuts in other parts of the world. Glaxo Holdings fell 17p to 695p and Wellcome 14p to 915p.

Forte, the hotel group, ended unchanged at 175p as the market debated the possibility of a dividend cut. The company has apparently met investment houses in the past week, which has left some looking for a cut but others expecting an unchanged payment. Carr Kitcat & Aitken is one looking for the year's dividend to be reduced to 6p from 9.9p. But Hoare Govett seems to have the impression the dividend will be held.

The builder Taylor Woodrow dipped 1p to 69p as Hoare, its stockbroker, sharply reduced its expectations. For last year it now anticipates a pounds 72m loss (against an earlier estmate of a pounds 37m loss) and sees only a pounds 10m profit this year.

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Stylo, the shoe group, rose 17p to 125p as hard-pressed Control Securities, the brewing, property and pubs group once run by Nazmu Virani, said it had sold its 26 per cent interest.

The stake appears to have been spread between institutions and members of the controlling Ziff family.

The weekend storms had their predictable influence on the composite insurers. General Accident, based at Perth and with a heavy concentration in Scotland, was seen to be the hardest hit, falling 12p to 569p.

Hopes that the elusive coal deal will be completed pushed the generators higher, although best levels were not held. National Power was 5p up at 301.5p and PowerGen 5p better at 303p.

Worries about figures today from Euro Disney lowered the shares 30p to 780p.

But the music group Boosey & Hawkes, still relishing its legal confrontation with Walt Disney, jumped 95p to 1,175p.

Watts Blake Bearne, the industrial materials group, jumped 22p to 465p as the market continued to ponder the signalled sale of a 45 per cent stake. NatWest Securities believes the shares should be worth 530p but points out any attempt to place the unwanted shares in the market could force the price lower.

Asda, the supermarket chain, was overtaken by rights rumours, falling 3p to 65.5p. Cullens Holdings, the convenience stores chain, rose 2p to 12.5p on director buying.

The shipping group Horace Clarkson tumbled 10p to 68p following the boardroom shake-up and 'a detailed review' of its Lloyd's insurance broking operations.

A NatWest push moved NFC, the old National Freight Corporation, 10p higher at 271p.

Shaftesbury, the property group, continued to score from its Soho involvement, up 6p to 58p.

The FT-SE 100 index moved between extremes of a 1.9 gain and a 17.3 loss yesterday, closing with a 9.3 fall at 2,771.9. The FT-SE 250 index was lowered 4.8 at 2,904.2. Trading failed to reach recent levels, amounting to 490.3 million shares with 31,171 bargains. Government stocks gave ground

Seton Healthcare, floated in 1990 with a pounds 23m capitalisation, is now valued at around pounds 100m following heady profit progress and well-timed acquisitions. Growth has largely come from healthcare, with the sports business feeling the recessionary pinch. Profits last year reached pounds 4.8m and stockbroker Beeson Gregory expects pounds 6m this year. The shares rose 4p to 345p.

Pittencrieff is enjoying remarkable support. The shares rose 11p to 312p yesterday, making a 37p advance so far in the account. The group has indicated it plans to split into two and many felt the acquisition of AmBrit International was a prelude to selling off the oil side as a separately quoted company. An announcement is expected within weeks.