Market Report: Growing confidence rubs off on unit trust issues

UNIT trust management shares are beginning to enjoy the rally. As the rest of the stock market had a quieter session after last week's sharp gains, thoughts were directed at the much more encouraging outlook for unit sales.

With market confidence seemingly growing and many observers convinced the market is in for a much more settled period, there are hopes demand will build up for the vast array of unit trusts and other funds on offer.

M&G scored a 37p gain to 879p and Perpetual 44p to 1,023p. Gartmore rose 8p to 172p, Jupiter Tyndall 12p to 269p and Mercury Asset Management 26p to 588p.

Among integrated securities houses, SG Warburg put on 10p to 703p. Stockbrokers were led higher by ShareLink, up 25p at 278p. Brewin Dolphin, helped by its maiden results, rose 5p to 149p.

Johnson Fry, thought to be in talks to buy a fund management group, put on 6p to 193p.

Among investment trusts 3i made a better-than-expected debut. Placed at 272p, the shares closed at 292.5p in often busy trading.

The rest of the market, for the first time without the discipline of a trading account, ended on a firm note, with the FT-SE 100 index up 7.2 points at 3,082. Dividend payments stripped three points from the calculation.

At one time it seemed the market's revival had come to a shuddering halt. But hopes that German interest rates will be lowered this week caused a sharp swing in sentiment.

In the last three days of last week the 100 index rose 110.9. It is at its highest for eight weeks.

Rolling settlement got off to an uneventful start. Turnover was about average for what would have been the first day of an account. 'I've not encountered any hitches, but we and, more important, our clients are still adjusting to the change,' one private client stockbroker said.

Government stocks were firm ahead of today's crucial auction.

Wellcome attracted keen interest, despite a denial that is is involved in merger talks, with the shares gaining 13p at 629p (after 635p). There has been considerable US speculation that the Wellcome Trust, with 39.7 per cent, would be prepared to support a merger with another large drugs group.

Some wonder whether Glaxo, which could seek to widen its drugs portfolio, is lurking.

Boots fell 11p to 538p. There was disappointment with the mooted pounds 600m- pounds 700m price tag the Robert Fleming-led consortium is putting on its drugs operation.

William Low, the supermarket group, added another 3p to 256p. Tesco, with a 225p-a-share bid accepted by the Low board, gained 5.5p to 238.5p. J Sainsbury, pondering whether to mount a counter-offer, was little changed at 397.5p.

Cadbury Schweppes gained 7.5p to 451.5p as reports of hot weather soft drink sales and bubbling Coca-Cola figures overcame indications that Dr Pepper-Seven Up, the US soft drink group, was unwilling to give Cadbury board representation.

With 25.9 per cent of Dr Pepper, Cadbury has been seeking a boardroom place that would allow it to consolidate its share of the US group's profits.

It has extensive US soft drink interests and it is suspected that its long-term aim is to merge them with Dr Pepper, increasing its stake to a dominant level in the process.

Whitbread, ahead of today's shareholders' meeting, jumped 12p to 553p while Bass, owner of the Holiday Inn chain, continued to draw strength from last week's Hilton Hotel results, gaining 10p to 555p.

Insurances were firm with Sun Alliance, reflecting bid hopes, up 10p at 328p. But Prudential Corporation weakened 3p to 305p on the Lautro inquiry.

Betterware remained in the doldrums, falling 6p to 79p. OIS International, which provides inspection and testing services for the construction and oil industries, tumbled 18p to 36p as its chairman, James Mayne, forecast break-even for the first six months and lower year's profits.

Division, the computer group, jumped 28p to 133p as it disclosed a collaboration agreement with the Hewlett-Packard giant. The link covers virtual reality and computer-aided design work.

Sun Resources, which used to be Trident Petroleum, put on 5p to 32p as its announced what seems a promising gas find at the Otway Basin, Victoria. The company, with more than 500 British shareholders, has exploration planned in Papua New Guinea.

Southern Business, the photocopier group, edged ahead 3p to 47p as word went round of a possible US bid. It has had a traumatic time with admissions that some staff had used fraudulent sales techniques and an Office of Fair Trading investigation. Profits slumped at the interim stage and it warned that the year's dividend might be cut. An offer could be a happy release.

After the 3i success hopes are high that shares of Exco, the moneybroker, will get off to a flying start today. They were sold at 175p, attracting a 3.2 times public subscription. Philip Gibbs, at Barclays de Zoete Wedd, believes the shares are worth 200p and 'may appreciate to above this level by the end of the year'. Most of the shares sold came from British & Commonwealth.

The FT-SE 100 index swung from a 14.3-point loss to a 7.2 gain, ending at 3,082. The supporting FT-SE 250 index rose 9 to 3,560.3. Turnover was 518 million shares, with 25,627 bargains recorded. Government stocks were firm.