Talk of a Hong Kong takeover lifts Inchcape off its knees

MARKET REPORT

When a share is on its knees, takeover speculation often erupts.

Currently it is the turn of Inchcape, the international trader which, following a profit warning. is bumping along near a four-year low.

In busy trading the shares advanced 10p to 319p with some optimistic souls talking of a hostile bid from Jardine Matheson, the Hong Kong-based trading group.

Certainly, Inchcape looks vulnerable. Its shares crashed in January after it issued a warning profits would dip below last time's £252.4m.

The strength of the yen and depressed car sales (Inchcape has extensive car distributorships) caused much of the damage.

The warning surprised the City which had been looking for profits up to £275m.

Inchcape shares, which touched 294p last month, were as high as 565p last year.

The latest buying spree consisted largely of small deals; even so prices of up to 225p were paid. The rumour has its merits. The two would be an ideal fit and a takeover would satisfy Jardine's desire to increase its international spread ahead of the Chinese takeover of Hong Kong.

Elsewhere, electricities again dominated the scene. After two days of meltdown, prices displayed a little more strength but their recovery was relatively modest. Northern Electric improved 25p to 818p as Trafalgar House pondered the wisdom of its bid.

There was even talk it would, if it possibly could, abandon Northern and strike for Yorkshire Electric, up 43p at 664p. Other brighter spots included Midlands, up 39p at 621p, and East Midlands, 37p at 598p.

Waters also steadied with South West up 15p at 480p.

The partly-paid generators continued to show the scars of this week's upheaval, trading below their issue price. National Power slumped 9.5p to 166p and PowerGen 11p to 176p.5p NP fully-paid fell 9p to 433p and PG 7.5p to 463.5p.

But if the excitement evaporated from utilities some financials had a torrid time as rumours and counter-rumours of deals going sour swept the market. SG Warburg swung from 710p to 674p as wild rumours it had difficulties meeting its obligations in Frankfurt went the rounds. A denial left the shares at 689p.

But it was not only Warburg's that was singled out for attention.

There was talk an unidentified European bank had suffered huge losses on emerging market contracts; a big US bank was also said to be on the verge of bankruptcy.

After the Barings debacle the financial sector had braced itself for an array of swirling, unsubstantiated rumours.

With currency markets in turmoil, the wild atmosphere is receptive to almost any financial rumour, however unlikely or even crazy.

The rest of the stock market had a lacklustre session with renewed weakness in sterling and the dollar creating anxiety and reigniting interest rate fears.

Encouraging company statements helped soften the currency blows. GKN gained 14p to 579p on figures and the success of its Westland helicopter subsidiary in winning a contract to supply the majority of the RAF's new fleet. The order is worth about £500m.

Results lifted BTR and Rolls-Royce but Arjo Wiggins Appleton and IMI gave ground. Raine, the builder, was dumped 17p to 30p as profits slumped and the dividend halved.

United Biscuits, figures next week, enjoyed another surge, gaining 12p to 352p as Hanson bid talk resurfaced and James Capel made positive noises. Volume was, however, modest.

Kingfisher fell 5p to 435p, ruffled by its up-to-£3m compensation package. Lloyds Chemists lost a further 27p to 210p. The shares have tumbled 75p since it announced figures and a reorganisation, including 100 shop closures.

Taunton Cider dropped 10p to 130p. Trades below the then ruling market price, including a 5.5 million block, did the damage. There was a string of deals at 129p. Taunton shares were floated at 140p nearly three years ago. Merrydown, its struggling and much smaller rival, stuck at 83p as fund manager Henderson Administration said it held more than a quarter of the capital.

Albright & Wilson, the chemical group which returned to market on Wednesday, made further progress, up 2p at 164p. The shares were sold at 150p. Eurocamp, the continental camping site group, put on 6p to 254p. The market expects an encouraging trading statement at next week's shareholders' meeting with some saying booking have increased 40 per cent.

Stagecoach, the bus group, retreated 28p to 209p as the Department of Trade and Industry ruled it must sell its 20 per cent stake in Mainline, a Sheffield bus group.

Computer games shares felt the impact of the MMC's demand for measures to open up the UK market. CentreGold, already hit by poor trading results, fell a further 4p to 38p.

Care UK, a retirement homes group, achieved one of those dramatic, but illusory gains following a share consolidation. A one-for-10 revamp appeared to lift the shares 60p to 67p. In fact, they fell 3p.

Broadcasting shares came under pressure following a report the Government had ruled out radical reforms of controls that prevent newspaper publishers owning more than 20 per cent of commercial television and radio stations.

Yorkshire TV fell 30p to 380p and Capital Radio 12p to 361p. Ulster TV lost 19p to 465p and Scottish TV 20p to 408p.

Whinney Mackay-Lewis, the architect, fell 2p to 25p as its Cardiff subsidiary, Hoggett Lock-Necrews, was put into administrative receivership.

Shield Group, an estate agent that has suffered severe losses, held at 7p, pricing the company at less than £1m. There is talk of discreet share build-ups with a mystery buyer paying particular attention to the group's preference shares; the 5.84 per cent stock gained 100p to £128.5.

The preference dividends are in arrears. The group, which owns the Stickley Kent property business, pulled out of an unsuccessful venture into computers last year.