Market Report: Some hard cash goes into a cement maker

BLUE CIRCLE Industries, producer of nearly half the UK's cement, starred in a lacklustre stock market as two heavyweight City forces pushed up their profit forecasts.

The group should be one of the early building material beneficiaries when the economy emerges from recession. The new forecasts - and it is expected others will edge their figures upwards as BCI sees more analysts this week - clearly imply that the cement maker is adopting a more optimistic stance.

The stockbroker Cazenove is thought to have lifted its estimates for last year from pounds 78m to pounds 84m and from pounds 123m to pounds 140m for this year. The securities house Hoare Govett went from pounds 70m to pounds 80m and pounds 125m to pounds 135m.

But some investment houses were suspicious of the increases in this year's estimates and, despite the round of investment meetings, seemed ready to hold their forecasts at nearer pounds 125m.

(Graph omitted)

However BCI shares, in occasionally brisk trading, rose 12p to 208p, still a far cry from their 1992 high of 284.5p.

The rest of the market was unsettled by the latest outbreak of hostilities in the Gulf with the FT-SE 100 index giving up a 10.5 points gain to end 2 down at 2,763.1. Cash-call worries and fears of more profit downgradings also kept shares in a subdued mood, overcoming indications that interest rates will be pulled lower in the next few weeks.

Charter Consolidated, on confirmation it intended to sell its 38 per cent stake in the metals group Johnson Matthey, rose 14p to 663p. JM lost 19p to 494p. Tarmac edged ahead 2p to 106p on talk the materials and housebuilding group could be a Charter target.

The china clay producer Watts Blake Bearne, another faced with a departing shareholder, was at one time 30p higher but closed 8p better at 433p. Ceramics Holdings and its two concert party associates want to sell their 45 per cent interest. Any deal is likely to be completed at the 433p closing price.

WBB made it clear it was unhappy about the 'highly unsatisfactory' position it found itself in 'arising from a private concert party agreement between these three shareholders'.

Drug shares were more positive; Glaxo Holdings up 12.5p to 728p. Despite a Barclays de Zoete Wedd upgrading Wellcome ended 3p down at 912p. BZW lifted its estimate for the year ended August from pounds 627m to pounds 650m.

It was the sort of day when buy recommendations struggled to make an impression. Allied- Lyons failed to respond to enthusiasm from Carr Kitcat & Aitken, ending 2p lower at 604p. Hanson dipped 2.75p to 237.25p although NatWest Securities said buy. James Capel had a little more luck with BICC, up 5p to 343p.

British Airways was lowered another 5.5p to 265p. Besides the simmering Virgin debacle the market fretted that any USAir deal would eventually lead to a rights issue.

Unilever rose 11p to 1,079p as it undertook a series of investment meetings.

The gain reflected relief thatthere were no unpleasant surprises rather than any lifting of expectations.

Water shares were lower, reflecting a sale of 1 million shares at 482p by directors of Thames Water. Thames fell 9p to 484p.

London Merchant Securities, the investment and property group, was the subject of a 4.5 million agency cross at 72p. The price held at 75p. The steel group GM Firth rose 1p to 10p as a stock overhang appeared to be cleared.

Ferranti International, the hard-pressed electronics group, was another to be actively traded. The shares ended 0.25p higher at 11.25p.

Aberdeen Petroleum, which wants to take over the Brabant oil group, rose 1.25p to 10p as it, not surprisingly, rejected the takeover bid from Bellwether Exploration, a US group.

A few property shares came to life. Derwent Valley improved 11p to 285p and Shaftesbury continued to reflect its property interests in Soho with a 5p rise to 52p.

But Tay Homes, on the profit warning, tumbled 17p to 151p.

ML Laboratories, ahead of Thursday's investment meeting called by Hoare Govett, advanced another 35p to 11,153p.

The account opened on a subdued note with the FT-SE 100 index falling 2 points to 2,763.1. However, the FT-SE 250 index remained firm, rising 5.1 to 2,895.7. Volume was back below the break-even level at 488 million shares. Bargains totalled 28,754. Government stocks gave ground

Expect more developments at ARM, the company that has produced a new, highly desirable microchip. It now seems likely that its next move will be a trading link with Microsoft, the successful US group. ARM is owned by Acorn Computers and the US computer group Apple. Its micro success has lifted Acorn shares from 6p last year to 60p yesterday.

The ambition of Pepe Group, the jeans company, to abandon its USM quote and move into the private sector looks set to be fulfilled. Postel has discarded its 5 per cent stake at between 1.5p and 3p per share. Sources say Postel decided to sell because it was faced with a choice of having nothing if the group goes private, or taking whatever was available. Pepe held at 3.5p.

Queens Moat Houses was actively traded as the shares continued to struggle from their 26p low. They rose 0.5p to 50.5p with Nigel Popham at the stockbroker Teather & Greenwood pointing out that each 1 per cent fall in German interest rates is worth pounds 5m to the hotel group's profits. He believes profits will be down from pounds 90.4m to pounds 86m and the final dividend will be held.