Market report: Footsie scores a record points gain

A DASH of takeover action and more indications that interest rates should have peaked produced a much-needed boost, with Footsie scoring a record gain.

Even New York contributed. The Clinton factor was ignored as the overnight charge was followed, at least during London hours, by a resolute display.

Footsie's 181-points advance was, in blunt figures, its best-ever performance. It took the index to 5,648.2. But in percentage terms, the gain failed to achieve the records books. Indeed Footsie's best-ever one-day advance was achieved as the stock market recovered from the traumatic 1987 crash when, in one session, the index gained 7.32 per cent.

The previous record gain was scored last September when Footsie rose 160.8 following a newspaper story that the Labour was preparing to soften its stance on the EMU.

Some of the supporting shares joined the romp. But the small cap index was once again down in the dumps, falling 1.6 to 2,319.7.

The agreed pounds 744m bid from Friends Provident for London & Manchester reawakened takeover speculation in the insurance sector, and when the pounds 110m US offer for recruitment group Robert Walters appeared, the stock market was reassured that corporate activity had survived the market slump since Footsie peaked last month.

Robert Walters jumped 96.5p to 375p following a share exchange offer from StaffMark.

L&M, up 91.5p, hit the 600p bid price with the market hunting for possible counter bidders. Britannic, off 1p to 1,214p, was one name in the frame.

Expectations of other insurance deals lifted the likes of Norwich Union, 35p to 460p, and Prudential Corporation, 26.5p to 776.5p.

The market's progress was achieved in often brisk but by no means spectacular trading. Besides New York's exuberance and a suggestion of firmness in Tokyo, the market was inspired by the inflation figures and a surge in tax revenues.

Kingfisher continued to reflect the Credit Suisse First Boston support, gaining a further 35.5p to 489.5p. Granada was helped by Merrill Lynch, up 51p at 884p, but Reed International fell 9p to 514p as Schroders said sell, citing the group's diversification into electronic publishing as a reason for anxiety.

Drugs were on a high. SmithKline Beecham rose 40.5p to 733.5p and Glaxo Wellcome 62p to 1,970p (that often denied merger refuses to die), and Zeneca, as Swiss giant Roche dropped more hints about expansion, put on 128p at 2,340p.

National Power again drew inspiration from speculation of a Nomura-led consortium bidding pounds 85bn, surging 27p to 580p. But Thistle Hotels, where Nomura has apparently walked away after lowering its offer, fell 48p to 168p.

Vaux, the Sunderland brewer with what is regarded as highly-prized hotel interests, fell 10.5p to 308.5p in sympathy.

Jarvis, the construction and rail maintenance group, failed to hold an early gain, ending 4p off at 564p. Warburg Dillon Reed initiated coverage with a buy recommendation sending the shares at one time to 596.5p. The company is spending pounds 6m buying a railway track laying machine. Engineer Siebe managed an 11p gain to 251p despite an underperform prediction from Deutche Morgan Grenfell. AEA Technology firmed 44p to 865p after the technical products and engineering services group took over a railway engineering firm owned by former British Rail managers for pounds 12.2m.

Premier Farnell produced a rare ray of sunshine for the electrical distributors, gaining 6.5p to 233p after producing a moderately encouraging trading report.

Excitement broke out at Northern Foods with the shares climbing 13p to 182p on talk that Merrill Lynch was planning to upgrade.

The erosion of the ratings of the once high-flying pub chains continued. JD Wetherspoon, leader of the pack, was the worst hit, giving up 11p to 221p, lowest for more than a year. Greenalls softened 12p to 406.5p.

Distributor H Young tumbled 14p to 120.5p. Chief executive Rory McGrath said he could not account for the fall which took the shares to their lowest for around two years. He said he was happy with prospects for the current year "and having done our budgets we are in good shape for 1999."

Torotrack, the transmission group, suffered a humiliating rights issue rebuff. Only 2.64 per cent of its pounds 50m cash call was taken up. Underwriters have been left with the rest, offered at 300p. The shares fell 6.5p to 217.5p with worries that they will be kicked out of the mid cap index.

Polyhedron, the tools group, jumped a further 20p to 86p as American Tool emerged as the bidder, offering 88p. The shares jumped 21.5p on Monday on pointers to a possible offer.

But textile group Parkland, where there was talk some of its shareholders could be thinking of a bid, fell 2p to 32,5p after the company said it had not received any formal approach.

SEAQ VOLUME: 897m

SEAQ TRADES: 55,551

GILTS INDEX: n/a Action could be near at South Country Homes, an obscure residential letting company. Sandy Anderson, the railway entrepreneur who made pounds 33m from the sale of the Porterbrook leasing group, is chairman and sits on 27.9 per cent. Mr Anderson has made no secret of his intention to develop the company. SCH shares, active in the past week, put on 7.5p to 51p. Last year they were 25p. touching 66p a few months ago. Shares of Stoddard, the struggling carpets and floor coverings group which were 20p a year ago, rose 1.25p to 5.75p as businessman Richard Keeling emerged as a 6.8 per cent shareholder. In the year ended March the company, formerly Stoddard Seekers, suffered a pounds 4.3m loss. The arrival of Mr Keeling prompted a modest flow of buy orders with one investor prepared to pay 6.5p for 10,000 shares