LONDON Quiet but very firm

Press, 27 April 1987, Page 28

LONDON Quiet but very firm

PA London Equities tended to move higher in the last four sessions of what has been a fairly dull three-week account with the week shortened by an Easter holiday on Monday. Trading was relatively quiet throughout with sentiment overshadowedby worries that the current weakness of the dollar could force the U.S. Authorities to raise interest rates in an effort to support the sagging currency. "Such a move would hit the U.S. Stock and Bond markets hard and have a drastic knockon effect here,” one equity dealer said. The FTSE 100 index gained a net 52.1 points to 2001.5. However, in spite of the fears over the. weak dollar the market continued to be helped by underlying fundamentals, which dealers said are still positive. The market staged a strong rally on Friday in the wake of a heavy hint by the Prime Minister, Mrs Thatcher, in Parliament that a general election could be held very soon.

Operators interpreted her remarks as pointing to an election some time in June, and recent opinion polls point to the ruling Conservatives almost certainly winning,

probably with a hefty working majority. Thatcher’s comments came in the wake of several newspaper reports that the Government is planning further cuts in personal taxation in the short term. This follows a two per cent tax cut in the Budget It should increase Tory popularity, dealers said. “The uncertainty of the election date has been hanging over the market for some time and holding back prices, but this doubt has to some extent now been removed,” one dealer remarked. Sentiment was also .helped by an announcement that the Japanese intend to lend up to SUS3O billion to Latin American debtor nations as part of taking a broader role in the world economy. The Japanese intention was seen as helping to soak up some ,of its trade surplus thereby dampening recent fears of a major trade war. Bank shares surged on the loan news, and despite profit-taking managed to end the week showing substantial gains. Lloyds, which analysts said has the largest exposure to South American debt of the four major clearers, gained a net 55p to 533, while Midland was up 62p to 670.

Dealers said the banking sector could also benefit from the weaker dollar by cutting down interest repayments on overseas loans, which are to a large extent dollardenominated.

Barclays was up lip to 520 and last week gained shareholder approval for

its plans to raise some £2OO million; via share issues in the U.S. and Japan. Gold producer shares were generally firm, but showed a relatively muted response to a SUS2O qn ounce surge in the bullion price. Despite the bullion rally, traders were content to keep to the sidelines and expressed concern over the current strike unrest in South Africa. Kloof put on 137 c to 1444 but Randfontein shed a net $1.50 to 148%. Lon-don-based mining financial RTZ jumped 74p to 977 but Consolidated Goldfields added just lOp to 983. Dealers said the gold price had been firm of late on the back of the weak dollar but shortcovering after the Easter break and a rally in the silver price helped fuel the gain. Brewing firm Guinness ended the week unchanged at 324 after reporting slightly better-than-anticlpated 15-month pre-tax profits of £355 million. The company also announced that it proposed to set aside £125 million as extraordinary items for the same period in the wake of a U.K. Trade Department ipvestigation into its take-over of Distillers Pic last year. BOC gained just ip to 451 despite news of a 15 year contract from British Steel worth between £l5O and 200 million. BP firmed 22p to 897 after extending its $7O a share , tender offer for Standard Oil until May 4. Other oils ended little changed despite a rise in

North Sea oil prices. Government bonds showed gains of more than two points at the longer end on the back of sterling continuing firm and optimism for a Tory victory at the forthcoming election. Softer domestic money market rates also helped, with the key three months sterling interbank rate quoted at 9-11/16 per cent late.: Friday which compares with current 10 per cent U.K. Base lending rates. • The benchmark Treasury 13}$ per cent stock due 2004/08 was trading about three points higher at 139-5/16. British Telecom shares were up 32p on the week at 277 after the recent opinion polls showing a convincing Tory lead. The main opposition Labour party has in the past outlined plans to take the company back into public control if it wins the coming General Election. Closing prices in pounds of a selection of issues were:— ' : t . Ampol, 1.31; Allied Lyons, 3.90; ANZ, 2.47; BP, 8.98; RHP. 4.90; Bond Corp, Ll 3; Brierleys, 1.40; BAT, 4.94; BritTelecotn, 2.74; War Loan, 39-21/32; Charterhall, 0.38%; ColesMyer, 2.63; CRA, 4.00; CSR, 1.82; Dalgety, 3.24; Elders IXL, 2.01; Fletcher, 1.98; Glaxo, 14.45; Hanson Trust, 1.60; ICI (Aust), 1.73; ICI (UK), 12.62; Uoydsßank, 5.20; Marks and Spencer, 2.88; MIM, 1.57; NatAustßank, 2.28; NBH, 1.53; NZI, 0.66; P and O, 5.99; Plessey, 2.32; Prudential, 8.18%; Reedlnt, 3.76%; Renison, 4.38; Reuter B, 6.73%; RTZ Reg, 9.62 and bear 9.77; SheUTpt, 11.60; StdTelCables, 2.80; Thorn ord, 6.87; TKM, 1.29; Transdev, 2.23; Unilever, 26.60; West Mining, 4.56; Westpac, 2.09; De Beers (quoted in SUS) 13%.