Market Report: GEC the star as market soars to a new peak

BLUE-CHIPS climbed to a new all-time peak yesterday, buoyed by a soaring Wall Street and by persistent talk of domestic mega-mergers.

The bulls took control of the FTSE 100 from the word go, and by lunchtime the leading index was already sporting a three-figure gain. The rally continued in the early afternoon, spurred by a strong start in the Dow. The positive winds coming from across the pond and a shortage of leading stocks helped the FTSE 100 to record its intra-day peak of 6,635.9 and then to smash its closing record, finishing 90 points higher at 6,593.6.

Dealers reported a steady flow of buying and said that some sizeable orders from overseas helped turnover to break through the one billion- share barrier. However, some market players cautioned that this latest push towards the 6,600 threshold could run into profit-taking later in the week.

The day was marked by several gravity-defying performances, but GEC stole the show. The restructuring telecom company soared 51.5p to an all-time high of 660p, as brokers rushed to praise Monday's purchase of the US Internet equipment company, FORE. Old market hands searched their memories for a similar jump in GEC's shares and had to admit that rarely in the company's long history had there been so much enthusiasm for its strategy.

In the market's eyes, the sale of Marconi to British Aerospace, confirmed yesterday, means that GEC has shed the unappealing tag of defence stock and should be rated as a high-growth, high-P/E telecom stock. The excitement was also fed by rumours that GEC is lining up another big deal. It was a shame that some of GEC's new-found peers ran into profit-taking.

Cable & Wireless, the takeover flavour of the month, lost 21.5p to 887.5p after news that an acquisition in Australia may be blocked by regulators. Cable & Wireless Communications followed its parent, slumping 16p to 711p as dealers reaped the rewards of a good run. Its would-be merger partner Telewest Communications suffered the same fate, ending 1.5p off to 295.75p. BT was an exception, rising 42p to 1,089p on talk of an imminent restructuring of its debt.

COLT shot 38p higher to 1,184p amid vague rumours of a bid. Takeover speculation supported Allied Irish Banks. The shares picked up 18.5p to 1,019p on renewed talk of a strike by Lloyds TSB, up 16.5p to 997.5p. Shell drilled an 11p advance to 444.5p on CSFB optimism and rehashed rumours of a merger with French rival Elf. Centrica flared 2.25p higher to 124.5p on big volume as speculation that it has dropped out of the bidding for the RAC continued to circulate.

The media sector featured on the market's front page. United News & Media surged 38p to 656p, as analysts warmed to Monday's trading update. Merrill Lynch advised clients to buy the regional publisher, with HSBC slapping a 725p target on the stock. Flextech, the TV company, blinked 50p higher to 901p. Several brokers are recommending the stock, but there is also a whisper that it is preparing to sell its 18.6 per cent stake in Scottish Media Group, the publisher and broadcaster, unchanged at 868p. United or the ITV companies Granada, 20p higher at 1,404, and Carlton, down 1.5p to 628.5p, could buy Flextech's holding.

Kingfisher rose a majestic 46p to 882p after unveiling a pan-European Internet service with the French entrepreneur Bernard Arnault. The Internet- cred boosted the Prudential, 29.5p higher at 869.5p after putting its low-cost bank, Egg, on the web. Cracking customer figures from Egg also helped.

Dixons, the Internet star, was on the wane. The retailer crashed 62p to 1,321p amid worries that the web marketplace is getting crowded. A late Internet arrival, WH Smith, was also hurt and lost 16p to 762.5p. Profit-taking also hit Invensys, the former BTR-Siebe, which fell 21.25p to 315.75p.

The mid-cap failed to keep pace with the leaders, managing an anaemic 20.1 rise to 5808.7. The small cap outpaced it once again, setting a 1999 trading record and a closing high of 2542.4 - an 8.5 increase on the day.

Premier Farnell led the charge of the engineers. The group rose 14.5p to 263p as Merrill Lynch said "accumulate", and targeted 290p. The rest of the metal-bashers were boosted by a bullish CBI report on manufacturers' confidence. TI, where the US predator KKR has a big stake, put on 25.75p to 495p, Charter soared 23.5p to 453.5p and Glynwed was 10p up to 217.5p. Pilkington benefited from the manufacturers' bonanza and rose 3.75p to 81.75p. Rumours of a strike from the French group Saint Gobain are always lurking.

The high-flying micro-chip maker ARM Holdings lost 32.5p to 665p after its big shareholder Acorn was taken private. The deal could pave the way for a bid for ARM by a US computer giant such as Intel.

The healthcare group Smith & Nephew bled 8p to 154.5p amid rumours that its artificial skin product could be blocked by US regulators.

The sausage-skin maker Devro burnt 7p to 137.5p as an expected 200p-per- share bid failed to arrive. The troubled cash-and-carry Booker soared 6p to 72p. There is some talk that the US giant Wal-Mart is not interested in Safeway, down 6p to 272.5p, or Asda, 5.75p higher to 200.5p and might be after Booker's large stores instead. The equally troubled group Albert Fisher digested a 1p rise to 6p on massive volume of 54 million shares. News on the disposal of its US distribution activities should be around the corner.

Ultima Network, a small computer services group, rose 0.75p to 3.5p as a stock overhang was cleared. Silvermines, an electrical equipment group, buzzed 7.5p higher to 38.5p after revealing it had turned down a bid from a former executive. NRP, whose main unit is the stockbroker Teather & Greenwood, rose 15p to 205p after saying that the bumper year on the stockmarket will push profits "significantly ahead" of analysts expectations of pounds 1.06m.

SEAQ VOLUME: 1.09bn

TRADES: 86,246

GILTS: 110.39 -0.40

IS A big retailer preparing to bid for Shoprite Group?

The small Isle of Man-based property and supermarket company rose 1.25p to 22.25p yesterday after buying back 500,000 shares at 21p. There are rumours that the buyback was a defensive move and that the board has received an approach north of 21p from a large chain.

A forthcoming Annual General Meeting should help to clear the air. The shares were 39.75p two years ago.

ALPHAMERIC, a supplier of broadcast equipment, surged 3p yesterday to an all-time high of 73.5p with more than 125,000 shares traded.

The company has developed software used to beam horse races into bookmakers' shops. A number of major bookies, thought to include Ladbrokes and William Hill, have had it on trial for a year and are believed to be keen to renew their contract, leaving Alphameric with some pounds 25m of fresh cash.