MARKET REPORT: Buyers rush to connect with BT

The FT-SE 100 index staged a late rally, gaining 4.6 points to 3,060.4; the supporting FT-SE 250 index lost 5.3 to 3,471.8. Turnover continued to improve, reaching 604.1 million with 20,039 deals.

BT has reinforced its position as Britain's biggest company. This week's buzzing share price has widened the gap between the telecommunications giant and its nearest challenger, British Petroleum.

The sudden stock market reconnection to BT is, in part, due to its initiative with the Viag group to establish a telephone network in Germany. The market is also inspired by thoughts that the present Whitehall price restrictions could be eased and the persistence of one securities house in presenting the view that the shares represent much better value than British Gas.

The AT&T stake is another influence. More by accident than design BT has around 2 per cent of the American telecommunication giant, worth some $1.7bn.

BT has made no secret of its desire to cash in its US chips and many observers believe the sale should be scheduled this month.

It was enough to lift BT, in busy trading, 9p to 402p, a two-day gain of 14.5p, putting its stock market value at £24.5bn. BP, a shade easier at 425p, is worth nearly £23.5bn.

The rest of the stock market was, not for the first time, hauled from the doldrums by a US charge. The FT-SE 100 index was drifting after lunch with a 17.4 points fall and seemingly set for a docile afternoon.

But New York caught dealers on the hop. The latest inflation figures had US buyers scurrying for stock and the sharp bounce in the Dow Jones Average pulled the Footsie up 4.6 points to 3,060.4. Some, however, were inclined to dismiss the US influence; they felt a leading securities house had got into a tizzy over a programme trade.

Drug shares continued their recovery with Glaxo, up 6p at 692p, leading the pack.

Cadbury Schweppes ended little changed at 430p, despite rumours it was about to strike at Dr.Pepper/Seven-Up, the US group where it has a 25.9 per cent shareholding; Unilever was another caught by US rumours. The shares were firm at 1,163p as stories flowed it was contemplating countering the Grand Metropolitan bid for Pet, the food group. Grand Met put on 4p to 382p.

The turmoil at Saatchi & Saatchi took another 12p off the shares to 112p; McDonnell Information Systems produced another profit warning, sending the shares crashing 32p to 74p.

The Saatchi problems pushed WPP 6p higher to 114p on the ill wind hope it may pick up some of Saatchi's business.

Airtours rose 8p to 435p as Hoare Govett made bullish noises, pointing the shares towards 540p. The company is believed to have investment presentations lined up.

Tomkins put on 8p to 231p as SG Warburg made positive noises, but Reed International remained under the impact of the Smith New Court caution, losing another 6p to 773p. Smith also took toll of Reuters, off 13p at 431p.

Hanson, as some detected it was flexing its bid muscles, fell 2.75p to 239.25p and RTZ gave up 13p to 786p on the weakening metals outlook.

Northern Foods slipped 1p to 214p as John Marshall at London Wall Equities suggested the shares should be avoided; old takeover favourite Carr's Milling held at 254p as it disclosed talks were on with a company called NWF.

The newcomer Caledonia Media started life at 24p against a 20.5p suspension price; on the oil pitch the Premier bid lifted Pict 3p to 188p.

Campari, where Blueridge has been stake-building and now has 23.19 per cent, was suspended at 25p. A refinancing is planned; details should be out in two weeks. Blueridge is the investment vehicle of Paul Thompson, head of Sanderson Electroncis.

Porth, the Christmas decorations business, slipped 0.5p to 3.5p; it forecasts a "significant loss" and said talks were on for a capital injection.

Forte, the hotel group, improved 3.5p to 247.5p as the market scented another cash windfall. It has nearly 25 per cent of Gardner Merchant, the catering group, which looks likely to fall to Sodexho, a French rival. Sodexho's shares were suspended in Paris. GM was hived off from Forte. It had been expected to come to market this year.

A surprise shake-up at Fiscal Properties, which came to the market last April at 78p. Terry Goddard, chairman and finance director, is quitting. He will be replaced by Richard Blaxland. Fiscal, 67p, arrived with a rock-solid portfolio of 18 properties, all let to the Government. In October it moved into commercial and retail property with a £17.5m deal.