Property provides the focus as Footsie drifts

MARKET REPORT

Property dominated a lacklustre stock market. Footsie drifted aimlessly in thin trading and if there had not been an outbreak of speculation in the property industry the market would have been in danger of dozing off completely.

The debate surrounding MEPC, the nation's third largest property group, was one of the main features.

The breakdown of merger talks with Burford and the subsequent pounds 247 cash bid for the PSIT property group nudged MEPC 7p higher to 476.5p.

MEPC's proposed deal with Burford was seen as a much needed opportunity to inject new management into the slumbering group. Nigel Wray, Burford's chairman, and Nick Leslau, chief executive, were expected to take top jobs in the enlarged group.

But the talks foundered over how management roles should be split. MEPC went off to buy PSIT and Burford retired to lick its wounds. Its shares fell a further 8p to 108p. They were 121p before the talks were called off.

Some are unhappy that Burford, which has an entrepreneurial image, was prepared to be submerged into what would have been a pounds 4bn property giant.

Hammerson, off 8.5p at 442.5p, lurks in the background. It too had unsuccessful talks with MEPC and some think it may be tempted to return with a hostile offer. British Land, little changed at 595.5p, is another considered to be a possible bidder.

British Aerospace, P&O and Great Universal Stores were indirect beneficiaries of the outbreak of interest in the property industry. Talk that it might float its Arlington property division lifted BAe, expected to produce sharply higher interim profits on Thursday, 31p to 1,567.5p, a record. An Arlington deal could accompany the figures, expected to be up pounds 100m at pounds 295m.

P&O, 13p higher at 660.5p, was drawn into the debate following reports that it planned to unveil details of its Bovis building offshoot's flotation next week, and Great Universal Stores, still anticipating the arrival of American Rose Marie Bravo at its Burberrys division, got further support from comments about its sprawling property portfolio. With speculation that Burberrys might be floated, the shares led the blue chip leader board with a 20.5p gain to 663p.

Footsie ended 9 points off at 4,985.2 with volume well below the market's perceived break-even level. Second and third-liners enjoyed a little more support than their peers.

ScottishPower celebrated a firm American debut with a 7.5p flicker to 469p. Brewer Bass fell 7p to 837.5p on stories that SBC Warburg had downgraded; the securities house denied any change of stance.

There was utter confusion early on in British Energy, with the shares quoted with and without its second call. After a short suspension trading resumed including the 98p call. Closing price was 308.5p, in effect up 2p

Standard Chartered fell 11p to 797.5p despite Merrill Lynch support but Rolls-Royce, after recent weakness, rose 2p to 230p.

Manoeuvring ahead of tomorrow's Footsie changes saw possible casualties rally. Mercury Asset Management rose 23p to 1,269p, and Hanson 5.5p to 317p. Sun Life & Provincial, a possible candidate in December if its pounds 690m Equity & Law takeover goes through, was little changed at 403p.

Chiroscience, ahead of a US presentation, rose 14p to 297.5p and Trafficmaster, involved in merger talks with Tracker Network, advanced 17.5p to 396p; Tracker spurted 65p to 610p.

Estate agent Savills firmed 2.5p to 130p. First Pacific of Hong Kong said it would splash out pounds 17m buying shares at 160p for a 20 per cent stake. John Tams, a potter, gained 12p to 55.5p on a bid approach and Northstar, a property tiddler, rose 6.5p to 45p after disclosing that major stakes may change hands.

Helicon, a reference publisher, rose 2p to 92.5p after signing a deal to supply online copy for BT's educational network.

Profit warnings lowered textile group John Haggas 10p to 70p and Vero, an electrical group, 10.5p to 89p.

Biocompatibles International held at 1,147.5p. Interim figures have been brought toward to today. A small loss is expected. There are hopes that the group will at last produce details of its signalled alliance with US drugs giant Johnson & Johnson. Negotiations have dragged on. They involve the bio-coating for stents, used to keep arteries open. There is talk of other links with the US giant which already has a Bio stake.

Taking Stock

Meggitt gained 2.5p to 128p, highest for 10 years, as it clinched a deal with the German Siemens Nixdorf group to provide specialist software for the petrol industry. The Germans have a contract from the Exxon giant to install computer systems at Esso service stations.

BTG, the development group, rose 19p to a 787.5p peak as analysts inspected its revolutionary Torotrack gearbox. Last week Shell produced a range of oils for Torotrack.

UK Estates, which fended off a pounds 21m bid from Ashquay, is expected to buy in 2.5 million shares at up to 29p tomorrow. The company, which recently sold its flagship St Anne's House, Manchester, is likely to make a substantial property purchase soon. Its shares are 25p.