Market Report: Bright start darkened by clouds from New York

IT WAS another see-saw session, with futures activity and a poor New York opening destroying an optimistic mood created by another round of largely encouraging company statements.

There had been fears the current reporting season would be an uncomfortable experience for the stock market.

But the deluge of results has been easily absorbed with many investment houses drawing attention to unexpectedly strong dividend payments and the more confident tone of many of the trading stories.

Instead it is interest rates, and the consequent slump in the bond markets, that have laid low the market's fragile confidence. Ever since the modest advance in US rates, sentiment has become increasingly muddled with talk of lower British rates mingling uneasily with signs US rates will continue to increase.

Although last week's hedge funds fright has been pushed into the background, the cash market remains at the mercy of futures trading and such influences as next week's expiry of the March futures contact which could, it is feared, lead to a stock battering.

Talk that US investors had grown tired of London and were unloading shares was also bad for sentiment.

Although turnover was above recent levels there was no early evidence of a trans-Atlantic selling wave, but the mere talk of one provided yet another excuse for a fearful and fragile market to give ground.

Recent trading has underlined the indecisive nature of the market and strengthened the belief that the first half of this year will be tough. But many investment houses still expect the FT-SE 100 index to end the year higher.

One is NatWest Securities, sticking with 3,900. It has raised its dividend growth forecast by 7 per cent as 'the outlook for payouts continues to improve'. The bond sell-off, it believes, has been overdone.

Barclays, the banking group, dominated the proceedings. Its figures, below expectations but without the rumoured rights issue, had an initially frosty reception, but a positive analysts' meeting left the shares 8p higher at 510p.

The bank's securities arm, Barclays de Zoete Wedd, where a heady round of bonus payments is promised, could have had another profitable day.

It purchased most of the Whitbread drinks portfolio and had little difficulty placing most of the shares. But some blocks seemed to stick. BZW, it is thought, could not find buyers for all the Greene King and Fuller Smith & Turner shares on offer and there was talk that some Marston Thompson & Evershed were still hovering when the market closed.

BZW is likely to dribble out any reluctant shares in the next few weeks. Whitbread rose 5p to 552p as the market speculated about its expansion plans. The sale to BZW realised pounds 225m for the bewing giant.

The drinks portfolio was inherited when it acquired its Whitbread Investment Co associate last year. Since the takeover it has realised pounds 300m from share sales.

Besides its stake in regional brewers and pub groups, WIC had modest holdings in the other big drinks groups. It appears these had already been sold. So it was unlikely a hovering line of Bass was part of the Whitbread clear- out. Bass shares fell 5p to 528p.

Ladbroke, at one time up 7p to 204p, ended at 201p with James Capel said to be pushing the shares. Forte retreated 6p to 264p as rumours it is about to absorb the Meridien hotel group, controlled by Air France, continued to gather strength.

Mirror Group Newspapers, results next week, rose 12p to 186p; advertising agency Abbott Mead Vickers, reporting today, rose 11p to 730p. Up to pounds 6m is expected against pounds 4.7m last year.

Saatchi & Saatchi was another communications group in demand. The shares rose 5p to 146p. Figures are due next week and there was talk they would be accompanied by sweeping management change. Profits are expected to emerge at about pounds 18m.

Supermarket shares eased but J Sainsbury managed a 6p gain to 368p on Hoare Govett enthusiasm. Tesco fell 3p to 227p. Societe Generale Strauss Turnbull said 'sell'.

Shipping broker John I Jacobs rose 2p to 50p. A substantial acquisition is being negotiated that could bring in a new chief executive. There is talk that Nicholas Berry, who is a significant shareholder in the Kunick amusement machine group, could play a big role in the development of the shipping group, which announced a swing from profits of pounds 3.4m to a pounds 300,000 loss.

Barr & Wallace Arnold, the leisure group, made headway in front of figures next week. There is persistent, if subdued, takeover speculation. The voting shares gained 35p to 630p and the non- voting 20p to 332p.

The FT-SE 100 index fell 12.8 points to 3,233.9. At one time it was up 17.3. The FT-SE 250 index eased 4.6 to 3,908.4. Turnover was 901.5 million shares with 34,946 bargains. The account ends today with settlement tomorrow.

European Leisure, once seemingly destined for the corporate graveyard, is attracting a little attention ahead of next week's interim figures. In January a capital restructuring was completed which dramatically reduced debt and offered a chance of expansion. The company has had a horrendous time in the shadow of its debt mountain. The shares put on 0.25p to 3.75p.

Sheffield Insulation rose 6p to 255p as profits came in almost in line with last month's forecast - up from pounds 2.9m to pounds 9.8m. The shares were 86.5p at one time last year. SI has tiny borrowings and is likely to continue its ambitious acquisition policy, which has just pulled in the Freeman insulation group. Profit estimates for the current year have been lifted to pounds 16.5m.