Market Report: Greenspan restores a little sparkle

ALAN GREENSPAN came to the Footsie's rescue yesterday and helped the index to the second-biggest jump in its history. The Fed chairman's hint that US rates may be on a downward slope soothed the index's frayed nerves and tempted back a select group of buyers.

Volume was thin, though, as the Russian parliamentary vote on the prime minister and the closure of Wall Street for Labor Day conspired to keep trade subdued. Most of the big hitters are back from their holidays but they remained firmly on the sidelines yesterday. Witty souls in the City described the bounce as a "sellers' strike".

The FTSE 100 remained blissfully ignorant of these smears and powered ahead, closing up 180 at 5,347.0, within a whisker of its 181-point record rise achieved on 18 August. It was a sparkling performance, even better than the 142-point rebound which followed the 1987 crash. The second liners hung on the big boys' coat-tails and also finished with handsome advances. The medium cap finished 83.8 points ahead at 4,747.1, while the small cap, that eternal underachiever, managed a 15.7-point rally to 2,084.9.

Buying was confined to a small number of sectors, led by the banks. Lloyds TSB proved the pick of the UK high streeters, netting a 54.5p jump to 713p. Barclays was in good form, too, climbing 6.34 per cent to 1,308p as traders started to put last week's Russian exposure shock behind them.

The Asian banks were given added sparkle by large overnight advances in the Nikkei and Hang Seng indices. HSBC Holdings, the owner of Midlands Bank, put up the best showing to close up 10 per cent at 1,243p, the biggest riser in the Footsie. Standard Chartered followed suit, aided by some directors' share buying, and closed 7.31 per cent higher at 448p.

The few who decided to buy were also interested in telecoms. Vodafone, the mobile phone operator, rang up a 9.4 per cent increase to 805p as rumours of a tie-up with the US giant Airtouch filled the City's airwaves. Cable & Wireless was busy, too: it ended up 44p to 627p, unaffected by the denial of a rumour of a tie-up with Telecom Italia and US West.

SmithKline Beechman and Zeneca flew the flag for the pharmaceuticals. SB finished a healthy 57p higher to 762p on - yes, you've guessed it - renewed rumours of a link with arch-enemy Glaxo Wellcome. Zeneca, the drug sector's perennial takeover target, rose 122p to 2,314p on vague talk of corporate activity.

BSkyB's attempt to take over Manchester United football club provided much of the excitement in the undercard. The Red Devils soared 30 per cent to 206.5p, topping the FTSE 250 league of risers, but still ended up below Sky's mooted 225p-a-share offer.

The media group controlled by Rupert Murdoch was also in the picture, rising 14.75p to 476.75p. Enic, the leisure group, which could be Mr Murdoch's bitter rival in the battle for Old Trafford, was up 9.5p to 128.5p. Enic is not saying anything about a counterbid, but the market seems convinced it will come soon.

The real comeback kids of the day were the other football stocks, which have been badly battered in recent times. Rumours of takeovers and mergers in the usually sleepy sector propped up many a relegated stock. Newcastle United was up 5p at 67.5p, Tottenham Hotspur scored a 4p victory to finish at 64p, while Aston Villa, one of the hottest takeover candidates, soared 52.5p to 615p.

British Vita contended for top spot in FTSE 250, and in the end closed 13 per cent higher to 230p after announcing a bid for rival plastic group Doeflex.

The FTSE 100 rejig, due on Wednesday, continued to muddy the waters. Lasmo, the oil explorer, lost another 2 per cent to close at 155p, and at close of play the widely-expected push to the FTSE 250 duly arrived. Torotrak, the gearbox maker demerged from BTG two months ago, made way for Lasmo in the mid cap and moved to the small cap: the shares had closed 1p higher at 163.5p.

But the real story is Telewest. The cable operator could be a surprise inclusion in the benchmark index. A share conversion following its deal with General Cable will push Telewest's market cap above pounds 2.8bn, well beyond the Footsie threshold. The shares firmed 3.75p to 135.75p.

A few spots of red in yesterday's sea of blue caught the eye. Rentokil Initial tumbled 9p to 347p after CSFB said "sell". Booker, the cash-and- carry business locked in merger talks with the supermarket Budgens, fell 18p to 170p after Credit Lyonnais turned negative on the no-premium deal.

Dewhirst, the clothing and toiletries group which supplies Marks & Spencer, had a horrible day. A fall in interim profits and a warning on full-year operating earnings saw the stock end almost 19 per cent lower at 105.5p.

Hazlewood fell 4p to 179.5p after BT Alex.Brown warned that falling tomato prices and poor summer trading will affect profits.

SEAQ VOLUME: 735.3m

SEAQ TRADES: 54,511

GILTS INDEX: n/a