Market Report: Brokers take heart as buying spree goes on

THE BUYING spree by investors continued yesterday, helping to pump up the share prices of companies with market-making and broking operations.

A heavy 817 million shares were traded, and the FT-SE 100 index powered ahead 41.4 points to 3,141.9.

There were only 13 fallers yesterday in the index, which has risen by 185 points over the last six sessions.

This is good news for the likes of SG Warburg, which recently warned that profits would be hit by lacklustre share trading in London over the past few months.

Warburg, one of the biggest market-makers, gained 14p to 647p. The price of ShareLink, which provides an execution-only dealing service and was also badly mauled by investors after making a profit warning, finished 19p better at 218p.

Barclays added 10p to 573p. Its BZW broking arm helped to swell the day's business with a programme trade spread spanning 28 stocks.

The continued recovery in share prices owes much to favourable economic statistics from both sides of the Atlantic.

Extreme caution in early dealings was cast aside at lunchtime as the US released better news on inflation.

The FT-SE 100 index, ahead just 3.2 points before the US data, advanced to plus 24 in less than 30 minutes.

All eyes will again be looking west today as the US announces September numbers for retail sales and industrial production.

Yesterday's speech to the Conservative Party faithful in Bournemouth by Kenneth Clarke, Chancellor of the Exchequer, also helped sentiment.

Gilts advanced a full point as he reiterated the Government's determination to keep the lid on inflation.

The Bank of England tapped the gilt market today for pounds 600m. It issued pounds 200m of 8.5 per cent Treasury stock due 2007, pounds 250m of 8.0 per cent 2013 stock, and pounds 150m of 2.5 per cent index- linked Treasury stock.

In equities, there was little hard corporate news to fuel the market's motor.

Body Shop initially advanced 7p on its better-than- expected results, although the advance was trimmed to 2p to 225p by the close as a number of investors cashed in on the shares' recent good run.

Lloyds Chemists remained in favour following its results on Wednesday, rising another 18p to 217p.

However, disappointing interims wiped 23p off Alexandra Workwear. The closing price of 161p was a low for the year.

VSEL added another 10p to pounds 13.20 as GEC, up 4p to 300p, indicated that it may throw its hat in the ring to counter the takeover bid launched for the submarine builder by British Aerospace.

Shares in BAe eased 4p to 467p, lowering the value of its bid by 10p to pounds 12.83 per VSEL share.

Some institutions yesterday took advantage of the strength of VSEL shares and cashed in part of their holdings by selling through the market.

Compass, strong of late on good news about the rapid integration of the pounds 300m acquisition in April of the Canteen Corporation, firmed a further 3p to 324p.

The group is preparing to host two visits to its Scandinavian operations in the next week for institutional investors and leisure analysts.

WH Smith hardened 4p to 455p as its investment roadshow got under way.

Investors were given some respite from the pain of seeing Proteus International shares slump over the past year from 478p to a low of 133p. They rose 7p to 140p on news that its immunology-based test was 100 per cent accurate in diagnosing BSE in brain tissue of cattle. It hopes to develop a test for live cattle next year.

Legal & General is moving into the investment trust business. It is understood Legal wants to raise at least pounds 50m to invest in quoted UK equities with recovery potential. The promotional bandwagon will start rolling next week. The fund will be managed by Lesley Hooper, who already manages Legal's recovery unit trust.

The FT-SE 100 index climbed a further 41.4 points to 3,141.9 as fresh economic data from the US provided more favourable news on the inflation front. A 21.3-point advance to 3,556.6 was recorded by the FT-SE 250 index.