Market Report: Perverse bears get upper hand

WORRIES THAT shares had run ahead too quickly overwhelmed a rousing round of corporate activity, leaving Footsie 62.2 points off at 6,085.

Normally a deluge of bids and deals would send shares soaring. But the stock market seemed intent on displaying its more perverse instincts, allowing a stream of profit warnings and nervousness in New York to dominate its approach. So the bear argument won the day and profit takers got the upper hand.

British American Tobacco, following its descent on the once quoted Rothmans International cigarette group, lit up 84p to 625p, and English China Clays, the minerals group, jumped 82.5p to 242.5p after rejecting a 225p a share cash offer from Imetal of France.

Enterprise Oil and Lasmo were more subdued as merger talks between the two groups were confirmed. In the weak oil environment the two are, in effect, cuddling together to keep warm. While Lasmo managed a modest 12.25p gain from near its year's low to l06.5p, Enterprise fell 5p to 278p, its lowest for more than five years. Whether the struggling oil groups will, after their hostile encounter four years ago, enjoy a cosy merger remains to be seen. Some expect ENI, the Italian group, to intervene.

The BAT deal puffed Imperial Tobacco 7p higher to 640p but left Gallaher down 3p at 405.5p.

A clutch of under-card shares joined the take over party. Field, the packaging group, rose 55p to 281.5p after reporting a bid approach; Sinclair Montrose Healthcare talked about a "number of approaches" and rose 23p to 136.5p and Copyright, the merchandising group, gained 20p to 127.5p after agreeing a 130p a share offer.

Regal Hotels was unchanged at 31p on its pounds 42.5m acquisition of County Hotels and Marston Thompson & Evershed slipped 5p to 297.5p as Wolverhampton & Dudley Breweries, not surprisingly, rejected its PacMan attack.

Rumours also abounded. Cordiant, the advertising group, denied bid speculation but the shares romped ahead 23.5p to 146p; Sears, on talk of a cash hand out as part of its defence against high street entrepreneur Philip Green, strengthened 34p to 289p.

On-Line jumped 13p to 29.5p although it said it could not account for the rise, and Brent International, the chemical group where talks are on, hardened 10.5p to 110p on rumours that a 140p a share offer had been agreed.

First Leisure shot ahead 30.5p to 232p as stories swirled that bid action was about to erupt. But Vickers, the engineer, failed to respond to weekend reports that its tank division would merge with Giat, the state-owned French group. The shares shaded 1.5p to 167p.

There was even a merger in the sedate investment trust world. Two Aberdeen trusts - New Dawn and Emerging Asia - are getting together. Emerging Asia rose 3.75p to 26.25p; New Dawn dropped 0.5p to 112.5p.

The market had started with a solid gain, reflecting New York's Friday peak. But worries about insurers and banks, and fears telecoms had shot ahead of the game eroded confidence. Allied Zurich, the insurer demerged from BAT last year, was one of the worst performing Footsie constituents, falling 34p to 987p.

Profit caution then took a hand. Tomkins, the buns to guns conglomerate, made downbeat noises with its figures and promptly fell 13p to 228.5p. Others erring on the side of caution included Kwik-Fit, the tyres and exhausts group, which reversed 73.5p to 462p; Courtaulds Textiles 13p to 160p; Paterson Zochonis 19p to 342.5p and Austin Reed, 1.5p at 84p.

It was not, however, all one-way traffic. Shining through the trading gloom were Wm Morrison, the supermarket chain, up 10.5p to 307.5p, and TJ Hughes 6p to 174.5p. Book seller Ottakar's; pub chain SFI and wine group Majestic failed to impress the market with reports of improved festive trading.

Dixons, ahead of tomorrow's interim figures, rose 23p to 881p and Reuters, given a push by Salomon Smith Barney, firmed 13.5p to 762.5p.

The mid cap index rose 5.6 to 4,982 and the small cap 7.7 to 2,141.5. Turnover, although not reaching some of the exotic levels hit last week, was a respectable near 900 million shares.

Caradon, the building materials group, fell 1.5p to 103.5p as an institutional shareholder placed stock. But HSBC turned more positive, suggesting a 170p break up value and a 135p target price.

KS Biomedix, a fledgling drugs group, jumped 20.5p to 299.5p on suggestions that it is on the verge of producing key trial data. The market got hold of a story that KS had carried out successful tests on its osteo-arthritis and rheumatoid arthritis treatments.

Middlesex, with metal interests in Russia, firmed 0.5p to 1.75p as chairman Lord Owen added 2.5 million shares to his collection, taking his stake to 0.80 per cent. The shares have been as high as 9.25p; highest in the past year is 5.5p.

SEAQ VOL: 898.8M

SEAQ TRADES: 78,423

Moves are thought to be afoot to give a new lease of life to loss- making Versalite, with its system for painting on glass. The shares have cracked from 4p to 0.75p since arriving on the market two years ago.

There is talk that the glass business will be hived off, possibly with father and son directors Les and Nick Easton buying it. The rump would be left as a cash-rich shell.

EASYSCREEN, which provides dealing systems for futures and options traders, arrived with a splash on the fringe, lightly-regulated Ofex share market.

The price rose 43p to 210p. The company, formed last summer, is valued at almost pounds 13m. But it is a thin market with directors accounting for 60 per cent of the capital and a single shareholder with 25 per cent.