Second-liners large on the menu

The mood in the London market's leading stocks blew hot and cold yesterday before ending on a modestly downbeat note. But there was no question about the institutions' appetite for the market's second-liners and smaller stocks, which powered ahead again.

Dealers insisted there had been very little selling pressure in the front-line stocks. On the contrary, there remained keen bids for top-quality shares, especially those scheduled to report in the near future. And bid stories were doing the rounds again with Safeway, the food retailer, said to be in the frame.

The utilities arena captured the market's attention as the takeover battle for control of Energy Group reached fever pitch, with Monday's counter-bid by Texas Utilities topped after the close by an increased offer from PacifiCorp and an even higher offer from Texas yesterday morning. Texas accompanied its bid with a market raid.

As well as the fierce battle over Energy Group, Southern Group, the last remaining independent English regional electricity company, moved into the spotlight as a takeover target. And the generators' shares fell sharply after a thinly veiled profits warning from National Power.

After the dust had settled, the FTSE 100 was left with a modest 12.9 decline at 5,807.7, ending a sequence of three consecutive closing records. That closing performance masked some earlier erratic swings, which saw the index move in a 60-point range.

For the FTSE Mid-250 it was a different matter. The index pushed ahead to record closing and intra-day levels for the fifth consecutive trading session. It ended a net 26.8 firmer at 5,281.4, having hit an intra-day peak of 5,289.5.

The FTSE SmallCap index also registered its fifth straight record close, ending the day 5.5 up at 2,484.7, only fractionally short of its intra-day peak of 2,485.1.

Turnover in equities reached 1.025 billion shares, the first time volume has exceeded the one billion level since February 5th, boosted by Texas Utilities' market raid which netted a 14.9 per cent stake in Energy Group.