Bearish rumours unsettle sentiment

LONDON'S equity market wilted again under a welter of bearish stories, some eminently plausible, others extremely far fetched.

The fundamentals included a disappointing Quarterly Trends Survey, published by the Confederation of British Industry, which highlighted sluggish output and new orders and a dip in business confidence.

The absence of another much rumoured takeover bid in the utilities sector was a further depressing influence in the market place. Another downside factor was a strong rumour that one of the big FTSE stocks was preparing a substantial rights issue, possibly to finance a big acquisition. British Airways was cited as a possible rights issue candidate, as were the Footsie's brewing giants, Bass and Scottish & Newcastle.

Adding to the market's general unease yesterday were worries about today's auction of £3 billion worth of 10 year gilts. Dealers said bond markets had become increasingly nervous ahead of the gilts, bund and bond auctions scheduled for this week.

The upshot of all this perceived bad news was that the FTSE 100 index posted its second successive decline, dipping a further 19.7 to 3,833.0. The downside pressures were much less obvious in the FTSE Mid 250 index which finally succumbed to small pockets of profit taking and eased 4.0 to 4,540.1.

The day was not without the usual daily dose of takeover speculation, or the "usual fantasies as one dealer put in.

The spotlight yesterday alighted on Zeneca, whose shares challenged their all time high in the wake of stories that a bid from the Continent or the US was on the way such stories have propelled Zeneca on numerous occasions in the past year.

Ladbroke, where talk of a bid from Bass, Scottish & Newcastle or Hilton International crops up weekly, were one of only a handful of Footsie stocks to make progress, as was Thorn EMI owing to renewed talk of a breakup bid.

Meyer International, the timber and building materials group, was another stock to attract takeover rumours.

London gave ground from the outset, with the FTSE 100 opening 13 point off and never looking able to recoup its early losses.

Turnover in equities topped the £1 billion mark, eventually settling at £1.08 billion shares at the 6 p.m. calculation.

This figure was inflated by the massive turnover in BET, 150 million, which accounted for 14 per cent of the overall total and followed the market raid on the stock by Rentokil.