Market Report: Takeover talk and buy-back hopes fuel blue-chip advance

Takeover speculation and hopes the flow of share buy-backs will continue gave blue chips another boost, lifting Footsie 69 points to 5,262.5.

Trading was often brisk as Legal & General's pounds 220m convertible bonds buy-back kick started insurers and talk of corporate action plagued banks and blue chips seen as vulnerable to unwelcome strikes.

L&G led Footsie constituents, gaining 42p to 590p. Prudential Corporation, 37p higher at 800p, was not far behind and Commercial Union and GRE were among others to respond.

Abbey National climbed to a peak, gaining 46p to 1,160p, on the growing conviction it will be involved in the next round of banking deals. National Westminster Bank, another candidate for the corporate merry-go-round, put on 43p to 1,070p.

Vodafone, 17.75p higher at 462.75p, enjoyed the dual benefit of a best- ever quarter and persistent speculation US giant AT&T is preparing to strike.

Energis, controlled by National Grid, dialled a 4.5p gain to 258.5p and Grid added 6.5p to 298p. There are suggestions AT&T could mount a double strike, scooping up Vodafone and Energis.

Grid was the most actively traded blue chip, with volume put at nearly 55 million shares. The HSBC banking giant acquired around 12.5 per cent, in a complicated deal with Olayan, an Athens-based company run by Suliman Olayan, a Saudi Arabian billionaire, in March, 1996.

In a mysterious, never fully explained transaction the then Hanson conglomerate sold the shares to the HSBC/ Olayan combination at 192p each. The stake is now around 11.5 per cent.

A solid performance by Government stocks - gains of up to nearly pounds 2 were scored - and a firm New York also offered the market inspiration. The likelihood UK and US interest rates will not be pushed higher and could even be reduced also helped sentiment.

Retailers swayed uncertainly as the market awaited the new year array of trading statements. Burton, due to report today, rose 4p to 140p and Boots, expected next Tuesday, firmed 18.5p to 899.5p.

Societe Generale Strauss Turnbull introduced a note of caution, hanging sell signs on Argos (off 15.5p to 536p); Next (4p to 704p); Storehouse (3p to 234p) and Great Universal Stores (7p to 772p).

Conglomerate Wassall hardened 1.5p to 336.5p, and shipbuilder Vosper Thornycroft held at 806p as Credit Lyonnais Laing highlighted the chances of share buy-backs.

Wilshaw, a distributor of industrial components, firmed to 38p. There is talk of a share buy-back although some expect a bid.

Elementis, the former Harrisons & Crosfield, was little changed at 140p as ABN Amro Hoare Govett forecast profits of pounds 46m last year and pounds 70m in 1999 from what it called a "major new force in performance chemicals".

Football club Sheffield Utd fell 7.5p to 43p following reports chairman Mike McDonald had talked about "financial suicide" if top players are not sold soon to reduce the wage bill.

Pace Micro Technology, the television decoders group which crashed from 235p in the past year, firmed to 47p as Panmure Gordon placed stock. Total turnover was 13.8 million. Airtours enjoyed a seasonal flourish, gaining 30p to 1,290p, a peak.

NRP, once called Nationwide Residential Properties, jumped 17.5p to 69.5p. It confirmed speculation of a reverse takeover of stockbroker Teather & Greenwood. NRP, which came to market 18 months ago, has been run by Roland Cornish, formerly chief of corporate finance at Brown Shipley, for a year. He made no secret of his plans to transform NRP into a rounded financial group.

Ionica's rally came to an abrupt halt with the shares falling 24.5p to 112p; Tepnel Life, the healthcare group, lost 7p to 57.5p.

There was a tingling of interest in biotechs. Chiroscience added 14p to 237.5p as its cancer drug started phase one clinical trials, and Peptide Therapeutics gained 10p to 276.5p following the disclosure US group Pfizer had agreed to join in the development of Peptide's veterinary allergy vaccine.

Taking Stock

It's looking bleak for Skynet Corporation, the controversial vehicle security group. Dealings in its shares were suspended at 4p on the fringe Ofex market "pending clarification of the company's financial position". An early Ofex high-flyer, the shares soared to around 275p and the group almost transferred to AIM. But questions were raised over share dealings. However, the Securities & Futures Authority has said it not investigating Skynet nor its directors.

Speculation of a bid for Southern Electric is strengthening. It is the last of the regional electricity groups to retain its independence. The shares rose 21p to 545p, a peak.

AIM-listed Cambridge Mineral Resources, thought to be near to clinching a big deal, rose 1p to 19p, a high.