Wide London swing settles

Press, 29 June 1987, Page 25

Wide London swing settles

NZPA-Reuter London Share prices on the London Stock Exchange again swung widely in both directions last week, but settled steady to firmer as market makers and investors alike tried to guess the next trend in the market. The FTSE 100 share index finished the week 25.2 points higher at 2291.3, but had been as low as around 2235 on Tuesday, only reaching its 2295.9 high on Friday. Dealers were saying the market appeared to have absorbed all the good news likely to emerge in the near future, but had been firming on the perception that the bull market remained intact.

Analysts said the market was still fairly well underpinned by the notion that overseas buying, anticipated in the wake of the Conservative Party’s June 11 General Election win, will eventually materialise. But they said it was now more likely to come in a steady stream than the “wall of cash” predicted.

Market fundamentals are seen by many as remaining positive and attractive to overseas investors, although the record highs after the election have probably deterred some would-be buyers. Volume during much of the week was sparse and, dealers noted, largely interprofessional, although a steady level of commitment by U.K. institutions was detected.

Argyll Group's £2OB million one-for-eight rights issue set the market thinking about the chances of similar moves from other, companies, and the programme of government privatisation due over the summer and the rest of the year. Investors believe that Mid-

land Bank might see a large’ rights issue as one way to strengthen its balance sheet against bad debt provisions. The BAA flotation and release of more BP shares could also be a heavy drain on the market, dealers said.

A survey from the Confederation of British Industry published on Monday added to positive background factors for the market. The survey said U.K. companies expect to increase their output this summer to the highest levels for 10 years. There was a fair degree of speculative activity in the week which, along with the thinness of trading, helped to exaggerate the upward trend, dealers said.

Reed International shares finished the week 5p firmer at 581, but had been as high as 612 midweek on continuing speculation, scotched by Harcourt Brace Jovanovich, that Harcourt might be considering buying Reed to deter the unwelcome BPCC bid. ■ Shares in BPCC itself were up 20p on the week to 326, partly on news it is seeking to block Harcourt’s recapitalisation plan. . Property shares rose sharply on speculation of a wave of overseas, possibly Far Eastern, investment in City of London properties following Ohbayshi’s £143 million purchase of Pearson’s Financial Times headquarters site, dealers said.

Pearson was 43p higher on the week at 705.

News of a £1.5 billion order for 72 British Aerospace 146 QT cargo aircraft from TNT of Australia heartened the market on Wednesday. BAe shares moved above 560 p midweek, but later drifted to finish the week just 6p firmer at 539.