Footsie riding on Dow's coat-tails

THE

Bulls believe the worst of the storm is over and 2003 could set the scene for a strong and sustained stock market recovery. But bears roar that uncertain economic conditions and the threat of an Iraqi war will further undermine sentiment in the coming months.

There are 'only' 54 shopping days left until Christmas. So be warned. It's always a crucial trading period for retailers who will be keeping everything crossed that consumers, as they did last year, go on another record-breaking spending spree in the coming weeks.

Many will continue to flex the plastic. Recent figures showed that Britons have amassed a record debt mountain of more than £800bn. That's an incredible £13,000-plus for every man, woman and child.

The booming housing market and low interest rates have encouraged people to live on the 'never-never'. Economists believe it will all end in tears, but retailers are just happy to make hay while the sun shines.

Weaker-than-expected US economic growth data yesterday increased speculation that the Fed could cut US interest rates by 1/4% to 1.5% next week.

If it does, that would put pressure on the Bank of England's Monetary Policy Committee to shave UK rates below the current 40-year low of 4%, possibly before the end of the year. That would further fuel the credit frenzy and housing-market. Getting in the spirit of things, a few fund managers decided to shop around for some bargains.

Marks & Spencer jumped 20 1/4p to 374 1/4p on expectations that Tuesday's interim figures will please. JP Morgan forecasts a 24.6% rise in pretax profits to £274.5m, thanks to restructuring gains and strong second-quarter sales which have already been reported.

Deutsche advised clients to buy Dixons, 9p higher at 190 1/2p. Rival Kingfisher rose 8 1/2p to 223 1/2p. The B&Q-to-Comet group today waves a tearful goodbye to chief executive Sir Geoffrey Mulcahy after 20 years. He makes way for new boss Gerry Murphy, who comes from Carlton Communications, 1p dearer at 125p.

Department stores Debenhams advanced 10 3/4p to 316p and Selfridges 10p to 276p. October actually turned out to be a pretty good month for UK equities after all.

Insurance shares made progress. The strong rally in markets has helped ease fears about solvency margins. Still searching for a new chief executive before it passes the hat round to shareholders, Royal & SunAlliance rose 8p to 116p.

Pubs group JD Wetherspoon was hung over at 282 1/2p, down 15p. Investors called time amid rumours of a profits warning.

Housebuilder Bett Bros jumped 22 1/2p to 416p on news of a 70% leap in pretax profits to £17.2m, on turnover 31% higher at £114m. It has also made a strong start to the current year. Country & Metropolitan, the housebuilder and property developer which this year launched an abortive bid for Tay Homes, improved 4p to 93 1/2p Full-year profits will be in line with expectations.

AIM-listed Terrace Hill edged forward 1/2p to 13 1/2p after acquiring land at Queen Elizabeth Park, Guildford, for £4.5m.

Heavy speculative buying amid vague rumours of a US-led management buy-out helped Incepta, which owns City spin doctor Citigate, rise 2p to 13 1/2p.

There is still no confirmation of a bid approach for stockbroker Seymour Pierce, unchanged at 4 3/4p. Word is that several parties have shown an interest, including a rival stockbroker and a property company.

A management buy-out backed by entrepreneur Nigel Wray is rumoured to be another possibility.

ACQUISITIONS are on the agenda at Armour Trust, 1/2p dearer at 17 3/4p. It has £5m cash in the bank and could pay up to £10m for a target. Full-year results showed pretax profits rising 17% to £0.7m and shareholders received a maiden dividend of 0.25p a share.

Analysts forecast £0.8m for the current year. Its audio electronics division continues to be the leader in the niche in-car entertainment and communications market.