Market Report: Jeremiahs come into their own in the twilight zone

Monday, the Jeremiahs warned, was meant to be meltdown day. And so it nearly proved. According to one version of stock market history, the recent 6 per cent correction in New York is only the beginning of something far more dramatic.

In 1929, 42 trading days elapsed between the peak in the US market and the Wall Street crash. The Dow index hit an all-time high of 5,778 on 22 May this year, exactly 42 trading days ago.

London traders must have felt they really were entering the twilight zone when they turned up for work yesterday morning to learn Tokyo had already fallen by 2 per cent overnight. An initial drop of almost 30 points in the Footsie seemed to confirm their worst fears but when Wall Street plunged almost 60 points in early trading some dealers could have been excused for eyeing up the nearest office window ledge.

In the event, London kept its poise to close 29.2 points off at 3,681.3 in thin trading, but another jittery session is in store today with the focus on Federal Reserve chairman Alan Greenspan as he presents the second leg of his testimony to Congress.

Among blue chips the biggest mauling was reserved for Thorn EMI, which is in the process of de-merging its EMI music business from its rental activities. The shares shed 42p to 1,693p after Thorn published disappointing first-quarter results from EMI and warned that it might take a pounds 30m provision for its exposure to collapsed German electrical retailer Escom. Sir Colin Southgate, the chairman, also played down bid talk that has centered on EMI.

Other big company casualties included Tesco, down 5p at 278p amid continuing speculation about a rights-funded bid for Docks de France. Today is the last day for a counter-bid for the French supermarket chain, which is currently subject to a hostile bid from rival French group Auchan.

Also in the dog-house was telecoms group Cable & Wireless, which gave up almost all of Friday's gains to close 14p lower at 413p as profit-takers moved in.

Leisure giant Rank Organisation slid 8p to 468p as its house broker NatWest reiterated its reduce recommendation on the stock. The cautious stance stems from uncertainty surrounding the imminent announcement of a strategic review by new chief executive Andrew Teare. It will not only set out which businesses do not fit with his longer-term vision for the group but also, and far more importantly the broker believes, identify where the group's substantial resources should be deployed.

British Gas, where former chairman Sir Dennis Rooke reckons millions of Sids were conned into buying the shares, enjoyed a rare day in the sun, closing 4.5p to the good at 190.5p in active trade. Broker ABN Amro Hoare Govett reiterated its positive stance while news that industry regulator Ofgas is to delay its statement on the TransCo pipeline arm until mid- August added to the positive sentiment.

British Energy, another stock to hit the headlines in recent days, said its Hunterston and Hinkley Point reactors resumed operations after a recent shutdown. Floated amid much embarrassment a week ago, the part-paid shares briefly touched 102p in early trade - just a penny below the price stumped up by institutions - before ending the day 2.5p lower at 97p.

BTR, the industrial conglomerate, firmed 1.5p to 237.5p, with NatWest Securities saying the market is failing to value the company's core manufacturing businesses highly enough.

Shares in Powerscreen International rose 10p to hit an all-time high of 490p after the Northern Ireland engineering group gave an upbeat trading statement to shareholders at their annual meeting.

Photocopier suppliers were also in demand. Danka Business, reporting on Thursday, recouped some recent losses, rising 7p to 415p, while Eurocopy advanced 2p to 73p on renewed buying interest. Recent interim results were better than expected and prompted analysts to upgrade forecasts. Panmure Gordon has a short term price target of 90p.

Troubled construction group Costain returned from suspension and a stormy shareholders' meeting to see its shares quoted 7p up at 46p.

Elsewhere in the sector RMC bought a further 10,000 shares in the tiny quarry group Ennemix at 60p a share, taking its stake to 4.77 per cent.

However, after the market closed French group Lafarge claimed that it had won control of Ennemix with a 52.5 p share offer.

TAKING STOCK

rElectrophoretics, the AIM-listed biotech start-up floated at 160p, nudged 3p higher to 103p. A recent note from Nomura highlights the potential of a collaborative deal with a leading diagnostic company to sub-license protein markers for nerve-related back pain, brain damage, stroke and cancers. The broker argues this comparatively low-risk strategy is not reflected in the price.

rFears that investors' appetite for more AIM stocks may be sated were eased yesterday when shares in furniture retailer Uno made a sparkling debut. Placed at 134p, they raced to an impressive 13p premium, valuing the company at pounds 20.6m. Based in Liverpool, Uno operates out-of-town stores in Manchester, Leicester, Cardiff and London. The news augurs well for another new issue, Allied Carpets.