Doubts are banished as EMI leads Footsie rally

Market Report

EMI led the stock market higher as worries that the bull run was over evaporated. Confirmation that the showbiz group was a takeover target helped Footsie to rally 95.2 points to 5,928.3. Supporting indices were also strong.

With financials recapturing some of their faded glory the market quickly took on a more positive appearance and, at least for the time being, the doubts which had nibbled at confidence were banished.

A strong New York and a further downgrading of higher interest rate fears were other encouraging influences.

EMI, in hectic trading, was at one time 129p higher; the shares closed at 607.5p, up 99.5p. Both EMI and its former partner, the Thorn rentals group, have had a depressing run since the demerger in the summer of 1996. EMI touched the equivalent of 738p; Thorn, on the receiving end of a yet unidentified approach, rose 2p to 211p against a 402.5p high.

EMI's would-be acquirer is also a mystery although most feel it is Seagram, the Canadian drinks group which seems to get most of its kicks these days from its involvement in the entertainment industry.

Allied Domecq, the retailing and spirits group, fell 6p to 615p after six-month figures. If Seagram does bid for EMI, Allied, under pressure to develop its drinks side after the creation of Diageo, could find itself forced to embrace the Seagram spirits operation.

Financials were helped along by some chirpy analysts' comments and, in the case of insurers, good new business figures. Commercial Union, which has endured a depressing run, jumped 82p to 1,119p and its chosen partner, General Accident, put on 88p to 1,406p. Schroders rallied 143p to 2,933p and National Westminster Bank 42p to 1,197p.

Hambros, one of the City's oldest merchant banks with a 159-year pedigree, gained 12.5p to 292.5p after Investec of South Africa made an agreed pounds 428m offer. The estate agent and insurance operations are being demerged.

Energy, the electricity group, fell 26.5p to 638.5p as Texas Utilities emerged victorious from the titanic bid struggle with PacifiCorp. But PowerGen edged ahead another 10p to 808p as the market continued to toy with the idea that PacifiCorp could direct its sights on PG.

Wednesday's order-driven trading confusion left British Petroleum down from a fictitious 960p to 944.5p. At one time the shares were 39p lower at 921p. TI, the other casualty, closed up 22p to 537p.

British Aerospace's 35 per cent interest in Saab, the Swedish aerospace group, pushed the shares 3p (after 25p) higher to 1,998p. BG jumped 11.5p to 319.5p on Dresdner Kleinwort Benson support.

Water shares were ruffled by a suggestion from the industry regulator Ofwat that they could be more efficient. Thames Water was lowered 10p to 975p and United Utilities 15p to 832p.

NRP, the property group now embracing stockbroker Teather & Greenwood, returned at 76.5p, against a 69.5p suspension price.

AMEC, the building group which has been the subject of takeover action, hardened 5.5p to 182p. A persistent buyer has been evident. Credit Lyonnias says buy, declaring: "The recovery is well under way".

MSB International, the computer group, firmed 2.5p to 970p after director Mark Goldberg placed shares at 950p, raising pounds 23.75m, which gives him the war chest to buy the 85 per cent of Crystal Palace FC he does not own.

Belhaven Brewery enjoyed a speculative run, gaining 10p to 205p, a peak. Finance director David Morrison said no takeover approach had been made. Greenalls, the hotel and pub chain, was another to collect a round of rumours; the shares added 10.5p to 485p.

Scotia, the drugs group, improved 36.5p to 376.5p as Unigate became involved in its Mavel yoghurt, which is being presented as a slimming aid. The yoghurt has been on sale in Sweden since the start of the year and launched recently in this country under the Skane Dairy Maval name.

British Biotech was busily traded, recovering 7p to 60p. Zeneca gained 124p to 2,576p after its breast cancer drug, Nolvadex, went to the US Food and Drug Administration for approval and its migraine drug was said to be safe when taken with the anti-depression treatment Prozac.

Continuing, if faint, hopes that the Glaxo Wellcome-SmithKline Beecham merger will be resurrected helped SB 25.5p higher to 713p and Glaxo 49p to 1,690p.

Inch Kenneth Kajang, the Malaysian leisure and plantation group, had another remarkable session, gaining 250p to 625p. The shares have risen 500p in two days. A year ago they were 850p.

Taking Stock

SHIELD DIAGNOSTIC rose 50p to 627.5p as rumours of corporate action went round the market. Merck of the US and Roche of Switzerland were the names in the frame. The American group was said to plan a 950p bid; Roche would be content with paying 800p a share for 30 per cent. The only development was share buying by stockbroker Colin Blackbourn, a longtime fan of Shield. He lifted his stake to more than 3 per cent, believing the shares are "ridiculously cheap" and "unfairly tarnished as a speculative stock". By increasing his stake to a notifiable level he has, he says, put his money where is mouth is.

ROBERT WALTERS, the high flying recruitment group, shaded 11p to 467.5p after Merrill Lynch lowered its recommendation from buy to neutral. Its cut its profits forecast by pounds 1m to pounds 10m for this year and is looking for pounds 12.8m next. The shares touched 574.5p last month.