Market Report: Shell flares as Footsie climbs to another new peak

Shell flared 25.5p to a 1,259p closing peak as institutional investors warmed to the Anglo-Dutch oil giant.

At one time the shares were 32p higher with US investors piling in following a New York presentation. Then stockbroker Credit Suisse First Boston injected a little caution into the proceedings, switching its recommendation from buy to hold.

The oil giant also benefited from continuing rumours of a big strike in Nigeria. With many London analysts positive on the sector, Shell has gushed 59p since Monday.

CSFB suggested a switch out of Shell into British Petroleum, up 12.5p to 757.5p. It suggested the impact of any overhang following the Kuwait Investment Office sale had been overplayed.

The rest of the stock market was again in rampant form with Footsie climbing to another peak and for the second day running second-liners in a remarkably ebullient mood.

NatWest Securities, however, does not believe the time is ripe to switch from Footsie into smaller and mid-cap shares despite their "horrendous" under-performance.

The FTSE 250 index scored its best gain for more than a year. It rose 40.9 points to 4,586.1 with some observers wondering whether the long under-performance of non-Footsie shares was at last coming to an end.

There was almost certainly an element of bottom fishing among the 250 shares but they could nevertheless be on a roll. The supporting index has moved ahead for the past six days, gaining more than 120.

Results this week from FKI, Johnson Matthey, and Scapa have attracted attention. Stockbroker Panmure Gordon says: "The most encouraging aspect of FKI's and Johnson Matthey's figures was the demonstration the leading mid-cap engineers can deliver and/or beat existing forecasts." The broker believes Johnson, up 24.5p to 547.5p, and FKI, 13p higher at 193p, are buys.

NatWest is less enthusiastic - at least about FKI. It expects growth to slow and regards the shares as a sell.

Footsie ended 25.7 points higher at 4,783.1; at one time it was just a few points from 4,800.

Energy shaded to 646p as PacifiCorp, the US giant, produced its 690p a share offer. But worries that the proposed deal could be sent to the Monopolies and Mergers Commission curbed enthusiasm.

The possible takeover for food group Albert Fisher provided a 12.25p boost to 46.5p. The shares have been weak in the past two months with the fall accelerating this week, leading to Fisher's removal from the FTSE 250 index.

Index funds and others who sold because of the Footsie relegation are said to be furious about the timing of the bid disclosure and demanding an inquiry. Perkins Foods, unchanged at 84.5p, is seen as another possible bid candidate. After having to live with the consequences of aggressive expansion it is thought to be on the verge of rapid growth and any bidder could judge the time is ripe to strike.

Unicorn International, an engineer, surged 64p to 219p as Saint Gobain, the French glass giant, produced a 225p a share bid.

Logica shareholders had reason to rue Friday the 13th. The shares crashed 95.5p to 755p following a profit warning. It was a grim development for other high flying computer shares with the likes of Sema, off 84p at 1,173.5p.

Rank, the leisure group, added to the trading gloom with a cautious statement which knocked the shares 40.5p to 385p. Hanover International, the hotel group, fell 3.5p to 121.5p after warning that delays to extensions at one of its hotels would pull profits below market expectations. Stockbroker Greig Middleton reduced its estimate from pounds 2.7m to pounds 2m.

Builder Tilbury Douglas improved 27.5p to 670p as German group Phillip Holzmann sold its 9.9 million shareholding through Cazenove and UBS. The shares went to institutions at 575p. Holzmann said last week it intended to sell its 29.4 per cent stake.

Rolls-Royce climbed 9.5p to 268.5p; it is part of a consortium which has won a British Midland contract and enjoyed SBC Warburg support. British Steel gained 7.25p to 163.25p ahead of Monday's results.

Inspirations, where a bidder lurks, fell 12p to 68.5p, and computer group Azlan lost 30p to 555p before trading was halted because of "unresolved accounting issues".

Gartland Whalley & Barker, the venture capital group which produced outstanding figures on Thursday, jumped 16.5p to 115p as director Tony Gartland increased his stake by 1.1 million shares at 90p.