Market Report: Pessimists confounded as bloodbath is averted

SHARES underlined their unpredictability. With most commentators expecting yet more bloodletting, blue chips, after a nervous start, rallied and the FT- SE 100 index closed 23.3 points higher at 2,899.9.

The recovery was largely technical and lacked conviction. Even so, there was hopeful talk of a more balanced atmosphere after last week's crash, which lowered Footsie by nearly 150 points.

In early trading the index was down 31.9 as the stock market braced itself for another unsettling session. The dollar crisis seemed about to worsen and bonds were weak.

But the futures market, which has dominated the turbulence, appeared much more relaxed. With equity selling failing to materialise, and the occasional bargain-hunter making his presence felt, shares perked up.

Adding to the more expansive mood were a more settled performance by the dollar, equity gains in New York and government stocks up by pounds 11 2 although nervous ahead of tomorrow's auction.

It was, however, another volatile session although trading was again remarkably thin. The 55- point Footsie swing was accomplished in turnover of only 463.2 million shares.

Allowing for double counting and inter-market trading, investment turnover was probably near 100 million. So, once again, price movements were largely untested by investors.

It was another two-lane market with second-liners often weak.

Fiercely savaged publishing shares struggled off their price- cut lows. The Telegraph put on 28p to 360p and United Newspapers 13p to 498p. But Mirror Group Newspapers shaded 2p to 128p.

Reed International provided the latest publishing shock. The sudden departure of chairman Peter Davis sent the shares tumbling 41p to 709p. But an upbeat profits forecast had restricted the fall by the close to 9p at 741p.

Vodafone was weak, off 9p at 473p with Hong Kong-based Hutchison Whampoa doing the damage. It increased the resources of its recently launched Orange mobile telephone operation in this country by raising pounds 700m.

Hutchison had planned to generate pounds 500m but drew down another pounds 200m after an 'enthusiastic market reception and oversubscription'.

Utilities firmed, largely on a revival of yield interest. Midlands Electricity, up 5p at 552p, is the latest to seek shareholders' approval for a share buyback. It wants authority to absorb up to 10 per cent of its capital.

BAT Industries improved 17p to 389p. It seems likely to press ahead with its dollars 1bn US tobacco takeover. Hoare Govett is thought to be keen on the shares, although it is said to have cut its profit forecast from pounds 2,020m to pounds 1,924m.

Newcomer John Mansfield, a timber group, ended at its 3p issue price with Seaq putting volume at 25 million shares.

Some of the US takeover excitement slipped away from Wellcome, although the shares managed a 4p gain to 602p.

Enviromed, the healthcare group reporting interim results tomorrow, was at one time down to 103p, closing at 106p, off 5p. It has forecast a 0.2p dividend and profits of pounds 100,000. Year's profits are expected to be pounds 2.4m.

Imperial Chemical Industries, up 14.5p to 765p, continued to benefit from last week's presentation.

Wassall, the conglomerate, rose 3p to 273p on an investment meeting and William Morrison, the supermarket chain, was unchanged at 126p after a rumoured meeting with analysts.

High-flyer Bluebird Toys fell 5p to 200p. Banque Cantade Lausanne has cut its stake from 23.79 to 21.65 per cent.

Waverley Mining held at 57p. It is raising pounds 1.16m through a placing of 2 million shares at 58p to GFM, an investment group controlled by Metropolitan Life of New York.

Cadbury Schweppes edged ahead 2.5p to 415p. NatWest Securities is the latest to downgrade, moving pounds 8m lower to pounds 477m and pounds 22m to pounds 515m. It rates the shares a hold.

Dixons dropped 7.5p to 179p as Goldman Sachs turned negative. Figures are due next week - about pounds 75m is expected.

Blue Circle Industries, developing a leisure and retail park at Dartford, Kent, with an Australian group, hardened 5p to 282p.

Builder Higgs & Hill fell 4p to 100p as its rights issue flopped with nearly 70 per cent going to the underwriters. But Alfred McAlpine, with a 75.7 per cent rights take-up, shaded 1p to 207p.

Exploration Co of Louisiana jumped 16p to 105p as it became the first foreign company to discover oil off the coast of China. Its first well in shallow waters in Bohai Bay has been tested at more than 2,000 barrels a day. Two more wells are planned on the same block. XCO, operator of the well with a 66 per cent interest, is hoping to expand its Chinese operations.

Donny Gordon, the South African tycoon, is raising cash in London. Liberty Life, his insurance group, hopes to pull in dollars 500m through a bond issue. Presentations are due to take place tomorrow. Some think US expansion is planned. Others wonder about a strike at GRE, up 18p to 552p. Mr Gordon runs TransAtlantic, which owns 50 per cent of Sun Life.

The FT-SE 100 index edged forward 23.3 points to 2,899.9 but the FT-SE 250 index again gave ground, off 10.8 to 3,363.4. Turnover was 463.2 million shares with 24,221 bargains. The account ends on Friday with settlement on 11 July.