Market Report: Speculators' hopes put sparkle into Ratners

RETAILING analysts could only watch with amazement yesterday as Ratners Group, the jewellery retailer, soared by 8.25p to 40p as speculators piled into the shares.

Some 31 million were turned over, more than 5 per cent of the day's total trading volume of almost 588 million - respectable for the first day of an account.

The price rise followed a 4p gain on Friday, mainly in the belief that the worst was now behind the group. Ratners' shares last traded at 40p back in 1991. The 6 per cent preferred closed at 42.75p, up 3.25p.

One analyst said: 'Buyers were ignoring reality. Anybody thinking that dividends are going to be restored on the ordinary shares should think again, because the company is in arrears on the preference stock.'

He said the group still had more than pounds 280m of debt, excluding the dollars 250m ( pounds 160m) of Amps - auction market preferred stock - in the US.

He added: 'The balance sheet looks such a mess, it will take something drastic to sort it out. A rights issue seems certain.'

Even though Ratners is burdened with debt, the plus point among speculators is that Laurence Cooklin, formerly at Burton, would not have agreed to become chief executive last week without a deep scan of the books.

There is also a belief that the pound's strength against the dollar will make a flotation of Ratner's businesses in the US look even more attractive.

Another cue for the speculators to pile into Ratners came from yesterday's results from Goldsmiths, the much smaller rival, which announced a turnaround from losses of pounds 1.3m to pre-tax profits of pounds 48,000 for the year to end-February.

The company's trading statement was also taken to heart. Sales so far this year are up 8 per cent on the corresponding period of 1992.

Shares in Goldsmiths firmed 1p to 46p, and a more sedate 348,000 were traded. Excalibur, another jewellery group, plunged 5p to 14.5p as bid talks were abandoned.

Argos firmed 4p to 299p on a healthy trading statement made at the company's annual meeting. Boots rose 5p to 439p, Burton gained 2.5p to 83p, Dixons added 6p to 213p, Kingfisher hardened 7p to 595p, and Marks & Spencer improved 6p to 348p.

The rest of the market was in fine fettle on the first day of the account, boosted by encouraging economic data, a buoyant futures market and strong opening advances on Wall Street.

There was fresh speculation of a further reduction in interest rates, even though it looked unjustified on yesterday's reports of a strong rise in consumer credit for March.

There was also good news on the inflation front, with imported raw material prices showing a fall.

The FT-SE 100 share index, despite being constrained by several constituents going ex-dividend, climbed 36.1 points to 2,829.8.

ICI continued to find favour, rising 41p to a 1993 high of pounds 12.84 ahead of tomorrow's announcement of the price of Zeneca's rights issue before it is floated out of the group.

Trading in ICI, however, was modest at 1.3 million and below the day's average for Footsie stocks of 2.2 million. Dealers' estimates for the rights price are pitched between 550p and 650p.

Tomkins jumped 13p to 236p on the job cuts at RHM. Its fellow conglomerate Lonrho rose 2.5p to 107p on sustained gossip of further disposals.

A positive note from James Capel saying that tobacco price war fears had been overdone saw BAT Industries rise 17p to 880p. Rothmans 'B' closed 7p higher at 843p.

Wolverhampton & Dudley Breweries, weak of late, surrendered a 1p rise on news that HSBC Holdings had bought a 4.73 per cent holding and closed level at 571p.

Confirmation of a contract in China to plan the future of nine industries in Tianjin, the country's third-largest city, lifted P-E International another 7p to 82p.

Buying activity in Cannon Street Investments remained buoyant, with 2.5 million traded. The shares spurted 3.5p to 20p.

Hopes of a fresh cut in interest rates, a batch of good economic indicators and a stronger futures market boosted share prices yesterday on the first day of the account. The FT-SE 100 share index soared 36.1 points to 2,829.8. Account ends on 21 May, and settlement is on 1 June.

Carclo Engineering, maker of textile equipment, is expected to make a takeover bid for Arthur Lee, the steel and plastics group, after shares in both companies were supsended yesterday. Carclo took its stake in Lee to nearly 30 per cent last autumn, buying an 18.5 per cent holding from GM Firth at 80p per share. Dealings in Carclo shares have been frozen at 233p, and in Lee at 142p.

Shares in Danka Business Systems, distributor of photocopiers and fax machines in the US, hit another high for 1993, with a 60p surge to 770p. The company is buying Uni-Copy Corporation of Arizona for dollars 7.2m ( pounds 4.7m), Copy Products, based in Alabama, and Cumberland Business Systems in Tennessee for an undisclosed sum. The three companies have combined annual sales of dollars 30m.

A sweeping reshuffle in the boardroom is being made by Airsprung Furniture, supplier of beds and upholstery. Michael Coppel, chief executive, is appointed joint chairman alongside John Yates, chairman. John Pierce, a director and managing director of Airsprung Beds, becomes chief executive. The shares have climbed from a 1992/3 low of 311p last September to a high of 475p, up 12p yesterday.