Prudential Corporation lively on talk of reshaping

MARKET REPORT

Developments are expected at Prudential Corporation, the nation's largest insurer with more than pounds 80bn under management.

The shares rose 10p to 424p in busy trading as word went round that Peter Davis was on the verge of launching the dramatic reshaping which has been suspected since he moved in a year ago as chief executive, replacing Mick Newmarch.

The Pru has made no secret of its desire to buy a building society with Birmingham Midshires and Woolwich high on its shopping list; it is also looking for a life insurer.

The insurance giant is planning to float its Mercantile & General reinsurance business. Goldman Sachs, the US securities group, has been called in to handle the share sale which could be worth pounds 1.5bn.

Talk of the disposal of M&G has often drifted around the insurance market with Continental parties rumoured to be interested.

BAT Industries was the best-performing blue chip, with a 3.8 per cent gain to 521p, highest since early March.

The shares were puffed higher following the tobacco industry's unexpected victory in what has become known as the Castano case.

A US judge threw out an action filed on behalf of smokers which, if successful, could have forced the industry into huge cash settlements.

The rest of the stock market suffered another uneventful session with, following the elimination of early losses, the FT-SE 100 index ending 5.1 points higher at 3,752.1, but the supporting FT-SE 250 index was again depressed.

General Electric Co improved 8p to 367.5p on talk of US buying and growing hopes of a pounds 650m cruise missile contract; supermarkets continued to reflect the sudden array of analytical support although Asda showed fresh signs of the NatWest Securities caution with a 1p fall to 117.5p.

British Gas fell 3p to 171.5p as regulator OfGas said it would publish its latest proposals for domestic price cuts on 9 June.

Railtrack continued to be shunted into the sidings. The shares fell another 2p to 216p. They touched 229p at the peak of Monday's flotation excitement.

Lucas Industries slipped 2p to 235p in another round of busy trading as the car components group confirmed its pounds 2.85bn merger talks with Varity of the US were going well. But any deal, which will not result in a bid for Lucas, will not, it said, be clinched before early next month.

National Power steadied to 517p. NatWest say the shares are "seriously under-priced" and despite the pounds 1-a-share special dividend, gearing in March next year will be no more than 50 per cent, possibly under 40 per cent.

Bio stocks were mixed with British Biotech down 185p at 2,790p as Merrill Lynch said the shares were 30 per cent overvalued. The decline could spell the end of BB's ambitions to move into Footsie next month.

Cortecs International was 22p higher at 373p as it duly announced it was on a cash-raising exercise, placing 5.7 million shares to raise pounds 20m.

BTG, the old British Technology Group, rose 150p to 1,925p on expectations of bullish weekend comment.

Dawson, a founder member of AIM last year at 480p a share, gained 350p to 1,650p as it bought out the other shareholders in the Surridge Dawson newspaper distribution business. It is paying pounds 15.4m to PWJ Surridge and pounds 5.3m to the 3i investment group.

Graham, the builders merchant, produced the traditional Friday profit warning, falling 15p to 164p. Wolverhampton & Dudley, the regional brewer, weakened 31.5p to 652.5p following results.

Michael Page, the recruitment agency, continued to edge ahead, up 2p to 328p, and engineer Thomas Locker put on 3.5p to 35p, a 12-month high, on talk of corporate developments. Earlier this year rebel shareholder John Carr sold his 11.6 per cent interest.

Caspian remained at 18p as the market awaited details of the Leeds Utd deal. Greenwich Resources gained 1.75p to 14.75p on the settlement of its dispute with an Australian mining company. It is collecting pounds 3.15m which will be used to develop the group's mining interests in Greece and the Czech Republic.

Emtech , a recent AIM arrival jumped 23p to 81p; Reflec put on 7p to 85p on reports it plans to sell the rights to distribute its reflective inks.

Epic Multimedia, expected to be an AIM high-flyer, continued to disappoint, falling 15p to 90p against a 105p flotation price. There had been hopes of a jump to 125p. Investors in a private issue last year were said to be selling.

TAKING STOCK

Alexon, the fashion group, gained 12p to 142p. An upbeat shareholders meeting this week has prompted profit upgradings.

The group, which turned a pounds 3.7m loss into a pounds 3m profit last year, had been expected to produce approaching pounds 6m.

But there are now hopes that the outcome could be more than pounds 7m.

rBeale, the century-old department store chain which came to the market a year ago, is trading well and could be set for profits of more than pounds 3.5m against pounds 3.1m. The shares are 273p, a peak.

rThe long mooted revamp at Carlisle, the property shell, is now expected next week. One suggestion is a leisure business will be injected.

The shares edged forward 0.5p to 22.5p.