Market Report: Footsie holds firm as US queries BP value

AMERICAN INVESTORS are questioning the London valuations being accorded to the shares of BP Amoco, the oil behemoth with the highest market capitalisation.

In heavy trading, BP Amoco fell 30.5p to 1,048.5p, with analysts at the Ing investment house in New York believed to be declaring that the shares were up to 200p overpriced.

The Americans could be taking a particularly parochial view. Many domestic fund managers are desperately short of BP Amoco shares; some have yet to adjust to the merger. They are certain to chase the stock if, as expected, the takeover of Atlantic Richfield is rolled out. D-day is now said to be today.

But the British pool of shares is not expanding. It is estimated that around 37 per cent of BP Amoco is now owned by US investors, and if the Arco deal goes through the transatlantic representation could increase to 50 per cent.

Although most London traders see BP Amoco stock moving ahead, the Americans have for the moment got the upper hand, inflicting not inconsiderable damage to the shares.

The rest of the stock market more than held its own, with Footsie, for the fifth day in succession, moving ahead. However, the gain was restricted to 31.2 points (after 88.4) to 6,295.3. The small cap index was also firm, gaining 3.5 points to 2,399.9.

Lower interest-rate hopes and an uneventful New York performance helped to settle any nerves stemming from the Balkan crisis.

The last day of the trading quarter produced some odd deals. The Stock Exchange does not like the term "rogue trades", but it certainly looked as though attempts were made to influence some computerised order-book valuations.

For example Energis, on the back of an 1,800p trade for only 2,710 shares, was at one time up 154p; the price ended 116p higher at 1,762p.

And South African Breweries, reflecting a 2,673-share deal made at at 565p, at one time sported a 30.5p gain; the shares ended 10p higher at 544.5p.

Window dressing for the quarter-end, plus adjustments for the looming close of the tax year, as well as the stampede into PEPs, kept the market on its toes, helping turnover to nudge 1.1 billion shares.

The end of Enterprise Oil's second flirtation with Lasmo left the two oil groups a trifle shaky; Enterprise fell 10.5p to 356.75p and Lasmo 89.25p at 125.5p.

BG lost 5.25p to 364p, unsettled by suggestions that it could be tempted to bid for Lasmo.

PowerGen firmed 3p to 682p. Edison Mission Energy, a US utility, was said to be on the verge of buying coal-fired generators after emerging as the highest bidder. It is offering PowerGen around pounds 1m. But the industry feeling is the Government may restrict the US group to just one of the PowerGen plants. Such a block would leave the way clear for newly created Scottish & Southern to snap up the other PowerGen operation; Scottish fell 16p to 560p.

Breweries were flat as worries about the upcoming Scottish & Newcastle year's results continued to create anxiety. S&N fell 18p to 666.5p and Bass 13.5p to 841.5p. But Whitbread bucked the trend with a 21p advance to 957p.

Takeover action, real and rumoured, once again swirled on the undercard. Powerscreen, the hard pressed engineer, jumped 44.5p to 149.5p with a bidder circling, and IOC International, making fibre-optic equipment, added 16.5p to 72p as a US share exchange offer materialised.

Capital Industries firmed 1p to 37.5p; Rutland Trust lifted its stake to 48.7 per cent and launched a mandatory offer at 40p.

The day's management buyout was provided by Warner Howard, a laundry systems group. The shares rose 18.5p to 202.5p after the company said it was in talks with its deputy chairman, Robin Phillips. Any bid, it said, would be at a "small premium" to the market price.

Stanley Leisure, the bookie, fell 22.5p to 275p after a profits warning. Its offer for casino operator Capital Corporation is in cash at 85p a share.

Sausage skin maker Devro added another 4.5p to 164.5p on continuing takeover talks, and Pilkington, the glass maker, was again excited by reports of an overseas strike; the shares rose a further 3.5p (after 6.5p) at 82.5p.

Johnson Matthey, the metals group, gave up 20p to 466.5p. There was talk of a Collins Stewart profits downgrade, from pounds 134m to pounds 130m.

Rio Tinto, down 22p to 859,5p, was ruffled by a Merrill Lynch downgrading; the same house also took a more cautious view of department store chain Debenhams, lowering the price 15p to 473.5p.

Nycomed Amersham, the healthcare group, rose by 36.5p to 540p following a presentation at a conference organised by Salomon Smith Barney. Contract caterer Compass, after a meeting with analysts, served up an 18p gain to 717p.

British American Tobacco was stubbed down 24.5p to 516p following the latest US smoking-and-cancer legal case award. There are also fears that the Australians will attempt to block BAT's proposed global merger with Rothmans International. The merger would give BAT 62 per cent of the Australian tobacco market, embracing "nearly all the major Australian cigarette brands".

Ryland, the garage group, motored ahead by 12p to 82.5p. The group, valued at pounds 23.4m, has sold its Multifleet operation to Paribas in a deal pricing its fleet hire business at pounds 25m. The transaction should produce a pounds 14m exceptional profit for Ryland.

Aim-traded educational publisher Q Group, up 11p at 88.5p, said it was thinking about a possible share presence on the Amsterdam stock market.

SEAQ VOLUME: 1.06bn

SEAQ TRADES: 99,865

GILTS INDEX: 113.36 +0.00

UPTON & SOUTHERN, the department store chain, is slowly switching its focus from retailing to head-hunting. It is expanding its Garner International recruitment side and its next acquisition, likely within the next few months, will involve a services company.

The traditional retailing operation was hit by tough trading in its north- eastern heartland. Half-year profits fell to pounds 40,000 against pounds 238,000; the shares held at 2.5p.

FORTUNE OIL caused confusion; the shares firmed 1p to 4p in often busy trading after the group made it clear that losses of $59.9m occurred last year and were not an indication of this year's results.

The group has raised an extra pounds 12.5m that will be pumped into its reshaped operations in China. Barry Cheung, mastermind of Fortune's Chinese build- up, has quit as chief executive; he is replaced by Richard Wong.