A MUCH more bullish mood was evident in London's stock market at the close yesterday. Dealers spoke of the potential for imminent corporate activity, possibly involving a counter move on Lucas Industries by BBA, but there were plenty of other rumoured bid candidates, especially in the composite insurance sector.
General Accident and GRE were being touted as strong takeover targets and there was another bid buzz, albeit a rather tired one, surrounding United Biscuits, after Cadbury Schweppes garnered £620 million sterling by selling its controlling stake in its bottling plant joint venture with CocaCola.
The prospect of another burst of takeover activity, plus a much needed rally on Wall Street, helped the FTSE 100 index recover from a mid morning bout of uncertainty and close the session in good heart.
The index was finally a net 16 points higher at 3,755.2. There was no such enthusiasm for the second liners, however. The FTSE Mid 250 index, burdened by a handful of profits warnings, retreated 13 points to 4,492.5. The warnings came from a wide range of areas, including specialist chemicals companies such as Inspec, and banknote printer De La Rue. Midland Independent Newspapers was another company forecasting profits lower than expected.
Helping to drive the market forward was a big two way trading programme, weighted on the buy side and executed by Merrill Lynch during the early afternoon.
Earlier, the market had faltered after a relatively good start. Wall Street's Monday night slide, which saw the Dow Jones Industrial Average dip another 18 points, and the yield on the long bond top the 7 per cent mark, caused no real problems.
The Footsie rose by more than eight points shortly after the opening, but quickly ran out of steam as the big institutions showed reluctance to push money into the market.
Gilt prices crept higher at the outset and posted gains of around six ticks, before slipping back to level at lunchtime.
The afternoon brought a strong turnaround for the market, however. The Merrill trading programme and the strong opening performance by Wall Street provided a shot in the arm for equities, which were additionally helped along by a firm US bond market.
Shortly after Wall Street opened, the Dow was up some 20 points, and showed a gain in excess of 40 points an hour after London closed.
A senior market maker at one of the big European securities houses said the London market felt "explosive" just before the close of trading, with the market being carried along by big gains in many of the banks and insurances and on the prospects for more bids.
