Market Report: Kuwait tension ignored as shares move ahead

LEADING share prices advanced for the third day running, an event last witnessed back in August.

Investors, though, showed no signs of being tempted back into equities - volume trading in shares was the lowest this year at 488.7 million. Fewer than 200 million shares were traded in the top 100 stocks.

There was no looking back from the bell. The FT-SE 100 index cruised through the 3,000 mark with an opening 11 point rise, and closed at 3,032.3, up 33.6 on the day.

The tension in Kuwait was brushed aside. 'There's been no threat to Kuwaiti or Saudi oil supplies so far and we've already seen what the allied forces can do back in 1990 when they faced a much stronger force,' commented one oil analyst.

Prices for Brent crude oil for November in early dealings climbed 30 cents a barrel in response to the weekend troop build-up on Kuwait's border with Iraq.

Unconfirmed reports in late trading that Iraq was set to withdraw its troops left November Brent just 5.5 cents higher at dollars 17.02 a barrel.

The main oil shares, with the exception of Shell, tracked those movements. BP hit 420p before closing 3p higher at 418.5p, and Burmah touched 847p to finish at 837p, down 7p. Shell ended at its high point of 710p, up 9p.

Besides the market's indifference to events in Kuwait, a further rise in raw material prices and an increase in consumer credit also largely fell on deaf ears.

Recent worries about interest rates were also forgotten, despite the possibility of some bad news on US inflation later this week.

Analysts' research notes provided a prime driving force behind yesterday's share price movements.

Merchant banks returned to favour following the bruising from recent profit warnings by SG Warburg and Hambros. Some dealers said merchant bank shares had been oversold.

Smith New Court suggested buying both Kleinwort Benson, up 16p to 449p, and Schroders, ahead 10p to pounds 13.23, and holding the rest.

Credit Lyonnais also cast a light over the sector, switching its stance on Warburg, up 23p to 610p, from sell to hold.

The better feeling about banks spilled over to the clearers. There were several double-figure gains, including NatWest, up 12p to 494p, and Barclays, up 11p to 553p.

Food retailers had a mixed session. Argyll, owner of the Safeway chain, remained overhung by concern about price wars and eased 1p to 264p.

Continued low prices in UK supermarkets also ended the market's honeymoon with Sainsbury's expansion in the US. Sainsbury shed 2.5p to 394.5p, and Tesco gave up 1.5p to 235.5p.

Wm Morrison, viewed as a takeover target in the wake of Tesco snapping up Wm Low, firmed 3p to 133p despite going ex-dividend.

In leisure, shares in Euro Disney remained under pressure and at one stage looked set to fall to a fresh low. The price initially fell 2p to 89p on reports, later denied by the company, that attendances at the theme park outside Paris had fallen from 9.8 million to 8.2 million.

In addition there were claims in the French press, also denied, that lower attendances had been accompanied by a reduction in average spend by each visitor on merchandise, food and drink.

In the prospectus for its rights issue in June, Euro Disney forecast that visitor numbers at the park would fall in the year to September, without giving a figure.

Results for the year to September are due next month.

Elsewhere, there were some heavy lines of red on the screens. Stanhope plunged to 10p and recovered to 14p, down 5p on the day as the company moved to defuse press reports that it was on the brink of collapse.

A profit warning sent Scottish Television 44p lower to 430p. Mirror Group, which has amassed a near 20 per cent stake in the company, slipped 3p to 128p.

Telegraph shares firmed 4p to 334p on Conrad Black's plans to top up his stake. Some 3.3 million were traded.

Cannon Street Investments, which took a hammering last week on disappointing interim figures, gained 3.5p to 17p on talk that its preference share problem would soon be resolved. There was also speculation that news of a further disposal was imminent.

Pentos - the owner of Dillons bookshops and the Ryman stationery business - hit a fresh low for the year of 14.5p, down 2p. A substantial half-year loss, perhaps as high as pounds 20m, is expected to be announced today. There is concern that the pounds 45m cash call made in March may not be enough to see it through its problems, and another rights issue may soon be on the cards.

Expect a positive analyst's note soon on Helene, the clothing group that recently paid pounds 10m for Reggie, the ladies outwear supplier. There is talk that the shares, up 1p to 28.5p yesterday, could be in for a re-rating. On full-year projections of pounds 6.6m pre-tax and earnings per share of 2.68p, Helene's shares are trading on a p/e of less than 11 and yielding a gross 9 per cent.

Shares made a positive start to the week despite concerns about the tension in Kuwait. The FT-SE 100 index broke back through 3,000 from the bell, and closed 33.6 points higher at 3,032.3. A 35.3-point surge to 3,482.8 was recorded by the FT-SE 250.

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