International Business News, April 8, 1998

Examiner International Finance

Unchanged rate reverses leading shares' losses

LEADING shares reversed their recent downturn and closed just short of an all-time high yesterday, after interest rates were left unchanged. The FTSE-100 Index closed 50·3 points higher at 6105·5, just off the record of 6105·8 achieved on Monday.
The rise was also helped by a strong rally in New York, as some analysts remained unconvinced rates had peaked.
Exporters advanced on the decision to keep the base rate at 7·25% with GKN up 54p to £15·84, Reckitt & Colman 25p stronger at £12·50 and Smiths Industries 14·5p higher at 837½p. ICI surged 30p to £11·24, while Rolls Royce firmed 1·75p to 274p.
Tobacco groups announced they were pulling out of a compensation-capping deal with the US government, deciding it would not stem a tide of privately brought cases. US-exposed BAT Industries gained 9·5p to 560p on the news, while Gallaher eased 2p to 320p and Imperial Tobacco slipped 9p to 439p.
Computer software group Lynx said it was buying software and consultancy group Tenhill Computer Systems for £10·2m. Lynx stealthily crept up 7p to 201p.
Blagden Industries gained 29p to 188·5p — an 18% rise — after revealing it is to sell its packaging business for £98m.
Mining group Lonrho fought off a shareholder revolt at an extraordinary general meeting over plans to buy back shares and acquire a South Africa coal business. Lonrho eased 2·5p to 104p.
National Express won the contract to run New York's Stewart International Airport, boosting shares 19p to 873½p.
Scottish Power was reported in talks with Internet provider Demon. Denials that it was close to a bid failed to stem speculation in Scottish Power, which gained 6p to 542p.
An announcement by Oftel that it was to ease licensing restrictions on mobile phone groups Orange and Cable & Wireless' One2One dialled up rises. Orange gained 7p to 424p and C & W improved 15½p to 738p. Vodafone dropped 7p to 622p.
Major movers: British Airways down 22p to 614½p, GEC down 9½p to 436½p, Nycomed down 25p to £21·30, Commercial Union up 59p to £12.80, Asda Group up 8p to 218p and BOC Group up 30p to 940p.

Dollar gains on Yen wiped out by aggressive trading

EUROPEAN stock markets closed up on Thursday after a dramatic surge on Wall Street helped to stoke an early rally, but dollar gains against the yen were wiped out by aggressive intervention from the Bank of Japan.
Traders said the impact of the intervention — which came just hours after Japan announced a long-awaited package to boost its economy — was all the bigger because it came as markets were winding down for Easter weekend.
Earlier, the dollar had risen to 133.62 yen, just after Japanese Prime Minister Ryutaro Hashimoto announced tax cuts of four trillion yen — spread over two years — and a total 10trillion yen in fresh spending.