Equities revived by utilities bid hint

"IT'S quiet, it's hot and most of us would rather be sitting in the garden with a glass of iced tea, or something stronger, than trying to drum up business in the stock market," was the view of one frustrated senior dealer yesterday.

The view summed up a disappointing day in the market, which made a brave effort to gain ground at the outset, only to run into small pockets of selling pressure, before edging higher again towards the close. The late gain came as rumours of another bid in the utilities sector began to circulate.

Talk suggested that an increased offer for Southern Water from Scottish Power was about to materialise, possibly as early as this morning, but certainly within the next couple of days.

Scottish Power's original offer for Southern was trumped by a higher bid from Southern Electric specialists insist that both bidders are determined to be successful and, if necessary, would pay over the odds to win.

London received no help from a lethargic Walt Street, which opened slightly easier, rallied and then slipped away again just after European markets closed for the day.

There was no important economic data to give a lead to either Wall Street or London, but dealers said both markets could liven up later in the week. On Wednesday, the June stock options expire, while the Footsie future and index options expire on Friday.

This morning brings the publication of the British public sector borrowing requirement for May, while in the US details of housing starts in May and non farm productivity for the first quarter.

The British retail sales figure for May, expected tomorrow, will be closely watched by the market.

While a big rise in sales could give a fillip to retail stocks, the overall market might take fright at the inflationary consequences of a consumer spending spree.

The early rise in the market was helped by a firm opening in international bonds, with German bunds lifted by the election news from Russia where Mr Boris Yeltsin emerged from the initial round with a small lead gave a ragged performance by the end of last week, when markets showed unease at the possibility of a return to communist rule in Russia.

Late in the session, turnover was given a hefty push by a sizeable two way programme trade, thought to have been executed by UBS. At the 6 p.m. reading, turnover was 712.2 million shares.

That figure was boosted by a placing of 20 million shares in 3i by Barclays Bank, hard on the heels of the sale by NatWest of 104 million shares last Friday.