Market Report: Shares catch on to US party mood

EQUITIES CAPTURED some of America's exuberance. After dismally trailing New York the stock market suddenly came to life with Footsie surging 174.4 points to 5,251.9; only two weeks ago the index was seemingly on its knees, touching a year's low of 4,599.2.

New York has been in rampant form since last week's interest rate cut. The Dow Jones Average has surged more than 8 per cent and was riding at 8,626.02 as London closed.

The upsurge appeared to have a snowball impact with trading gathering strength as the day progressed; turnover once again topped 1 billion shares.

The sheer volatility of blue chips is catching many players on the hop. In part it is due to order-book trading; the higher figures now involved, are of course, another influence.

Suggestions that recession fears had been overdone and more talk that interest rates would come down revitalised many shares hit by worries of a dramatic earnings slowdown. Hays was an example. The distribution and recruitment group led the Footsie charge, gaining 94p to 860p. Normally such a movement would herald a takeover bid or at least widespread speculation that some form of corporate action was in the air.

If Hays was in the takeover frame nobody was pointing the finger. There was not a whiff of corporate activity with the conviction that the shares were oversold cited as the reason for the advance.

Other victims of recessionary talk joined the romp, with the WPP advertising consultancy putting on 27.5p to 300p and Granada 59p to 844p.

Even battered and bruised Bass, down from a 1,175p peak, frothed 57.5p higher to 779.5p. The brewing and hotel group has already rolled out a profits warning; its figures are due in December.

Only six Footsie constituents lost ground. Boots fell 26p to 880p, seemingly responding to CSFB profit downgrades. The investment house lopped 2.5 per cent from this year's estimates to pounds 590m and 1.5 per cent from next to pounds 640m. It held its buy recommendation.

Centrica, off 2.5p to 113.75p was ruffled by fears of a Westminster probe aimed at examining allegations that the gas supplier was abusing its dominant position.

Norwich Union, disappointing new business figures, lost 8p to 420p; Orange, downgraded by CSFB, fell 7.5p to 532.5p.

Other fallers were Southern Electric, being taken over by Scottish Hydro- Electric, down 6p at 607p, and British Aerospace, for no apparent reason, 3p lower at 434p.

Lloyds TSB improved 51p to 778p, drawing strength from the takeover arguments of its chairman Sir Brian Pitman, His comments helped other banks.

Cadbury Schweppes, ahead of today's investment meeting, hardened 54p to 819p.

The buying spree occurred despite more signals of problems at the sharp end of the economy. BICC, the once proud cables and construction group which was around 460p five years ago, is now in danger of becoming a penny share, slumping 14p to 42p. A profit warning and a round of job losses did the damage.

Retailer Harveys Furnishing declined 45p to 64p on a profits warning, and Slimma, a clothing group, was ripped 9.5p to 16.5p on profits caution and job losses. Paper and packaging group Boxmore International fell 28p to 107.5p following downbeat comments.

The Harveys' downturn, coming close on the heels of the collapse of Essex Furniture, hit retailers, with DFS, figures today, tumbling 24.5p to 172.5p, and Next 6.25p to 455p. Rosebys gave up 12.5p to 116p.

With Footsie now at its best level for more than a month there is a little more activity in mid cap shares and even the neglected small caps. The mid cap index bounced 57 to 4,630.8 and the small cap managed a 14.4 gain to 1,935.7. Government stocks ended half a point down.

Once again takeover action underlined the yawning valuation gaps which have opened up on the under-card. Cirqual, the engineer, jumped 39p to 217.5p as talks got under way, and Gardiner, the security group, put on 3p to 28p after Rexel of France bid 29p cash a share. Brickmaker Ibstock rose 16p to 60p after Austrian group Wiennerberger paid 66p for 29.8 per cent.

Financially challenged Danka Business Systems gained 16.5p to 85p; Goldman Sachs picked up a 3.47 per cent stake.

Newcomer Old Monk, a managed pubs chain, achieved a token premium, trading at 60.5p; Thomas Potts ended at 5p against a 5.75p suspension price. Trading was halted while the company acquired Graycorn, a printer. AromaScan, with what is described as a "electronic nose", put on 1p to 6.75p as its rescue cash raising exercise was approved. Take-up was 57 per cent.

SEAQ VOLUME: 1.2 billion

SEAQ TRADES: 71,538

GILTS INDEX: 110.36 -0.52

DISCONTENT at engineering group Solvera: shareholders with more than 10 per cent of the capital want to put entrepreneur John Munro on the board and replace chairman Richard Duggan.

Mr Munro was managing director of Fairway, a packaging group taken over this year for pounds 28m. When he arrived in 1989 it was worth pounds 2.8m. Solvera, once OMI International, held at 7.5p: five years ago the shares were 60p.

RECRUITMENT group Robert Walters rose 16p to 270p as "put up or shut up" time loomed for rivals PSD.

Walters accepted a US bid worth around 500p a share until the market fall, but the value of the offer is now creeping up as the US company's shares strengthen. PSD acquired a modest Walters stake to keep open its options. If, as is suspected, it had a counter bid in mind, it cannot delay much longer.