Market report. Thursday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

The takeover of mobile phone group Orange by Germany's Mannesmann sent telecom shares jumping today.

But the excitement in the telecoms sectors was not enough to offset the effect of a sharp fall in the US markets and a severe drop by FTSE-100 heavyweight SmithKline Beecham.

The FTSE-100 held its head above water for most of the morning but was sent reeling by the depressed opening on Wall Street, which was prompted by poor earnings figures from computer giant IBM.

The Index made some recovery by the close but still ended the day off 67.4 points at 5939.3

The near-£20 billion takeover of Orange brightened the future for investors in the mobile company as its shares jumped 65p to £14.47, although the figure was still short of the £16.29 offer price as analysts questioned the German group's ability to fund the deal.

With 60% of the offer being funded in Mannesmann shares, an immediate slide in the German group's stock was also rattling some investors.

News of the deal lifted Vodafone AirTouch as dealers reckoned the chances of the group making a costly tilt at Mannesmann were now slight. Vodafone jumped 13 3/4 p to 273 3/4 p after several sessions of losses.

And the mood lifted other telcos with BT ahead 29 1/2p to £10.13, Colt Telecom up 61p to £16.78 and Energis up 53p to £17.87.

But SmithKline Beecham dragged the FTSE-100 Index deep into negative territory with a 12% slide in its share price.

The group shocked the market with the news that its potentially blockbusting diabetes drug Avandia had run into regulatory problems with European drugs watchdogs.

Even the announcement of a 16% jump in third quarter profits to £467 million could not save SmithKline shares which plunged 95 1/2p to 716 1/2p.

Other pharmaceuticals companies also suffered, with Glaxo Wellcome losing 58p to £17.41 and AstraZeneca falling 44p to £28.20.

Information and media group Reuters also spread gloom among investors after warning of falling revenue growth and a slowdown in the lead up to the millennium.

The group led the FTSE-100 fallers and closed the day down 86 1/2p to 560p - a 13% slump.

ICI made early gains following better-than-expected third quarter earnings figures. But profit takers moved in on the specialty chemicals group and shares ended the day down 36 1/2p to 571 1/2p.

Packaging group Plysu spectacularly bucked the market trend as its announced an agreed takeover by South Africa group Nampak.

The 196p a share offer valued Plysu at £96.4 million and the stock rocketed 58% - up 70p to 192p.

The FTSE-100's biggest risers were Vodafone AirTouch up 13 3/4 p to 270 3/4 p, Orange up 65p to £14.47, Colt Telecom up 61p to £16.78 and Energis up 53p to £17.87p.

The main fallers were Reuters down 86 1/2p to 560p, SmithKline Beecham down 95 1/2p to 716 1/2p, British American Tobacco down 54p to 416p and British Aerospace down 26 3/4 p to 343p.

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