Funds swell as punters stay wary

THE latest Merrill Lynch Global Fund Manager Survey says fund managers have money coming out of their ears. Cash levels have risen sharply in recent months and their overall cash position is one of the highest ever seen and only surpassed by the aftermath of 9/11, the credit crunch of October 2002 and the pre-Iraq uncertainty.

Because of overall pessimism about the global economy's prospects, investors continue to have a deepseated dislike of US equities ahead of the US presidential election. They remain overweight in Japanese equities, so where else will they put their money? Bulls pray it will be in the UK equity market.

Fund managers have turned negative on company profits for the first time since April 2001. Most of them want cash flow generated by companies to be returned to shareholders through share buybacks and/or dividends.

An easier oil price helped the Footsie retrieve an 11.6-point deficit to finish 8.5 points higher at 4358.7. Wall Street jumped 69 points at the outset following an unexpected dip in consumer prices in July for the first time in eight months and a sharper than expected rise in new-home building in July.

Strong earnings from Home Depot and an upbeat outlook from Motorola also helped sentiment.

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p>Betting shop-to-hotels group Hilton rose 7 3/4p to 257 3/4p. Ahead of half-year results on 26 August, Deutsche Bank said it expects healthy earnings growth.

The same broker advised clients to plug into mobile phone giant Vodafone, 1 3/4p dearer at 123 3/4p. Deutsche reiterated its 160p price target following a meeting with the company.

Vague rumours of an imminent 'merger of equals' between Lloyds TSB and Deutsche Bank was soon rubbished by both parties. Lloyds TSB touched 409 3/4p before closing 1 3/4p better at 404 1/4p on turnover of 36m.

Good figures from sector peer H&M and an upgrade by UBS helped fashion retailer Next gain 19p to 1505p. The broker lifted its target price to 1750p from 1700p.

Mallett, the antique furniture business in which property entrepreneur Jack Petchey owns 29.6: through Trefick, his Isle of Man investment vehicle, jumped 15 1/2p to an all-time high of 306 1/2p. Dealers hope Petchey will launch a bid soon or flush out another interested party.

A classic bear squeeze helped debt-laden Eurotunnel units rally 2 1/2p to 16 1/4p.

A revived rumour that 25.5% shareholder Liberty International is lining up a full-scale cash offer helped property investment and development company Great Portland Estates rise 9 1/2p to 275p.

Aim-quoted Meridian Petroleum gushed 5p to 46 1/2p after acquiring two stakes in two gas prospects in the US state of Michigan.

Bioprogress jumped 5 1/2p to 75p following its $450,000 acquisition of two film casting lines for the production of dissolve-in-the-mouth products. The purchases will increase its revenue generating to around $70m per year, up from $10m. Dealers have heard that UBS is about to be named company broker.

Stanelco firmed 1/2p to 5p after signing an agreement with US group Robert Reiser to supply its radio frequency technology in Reiser's traylidding machines in the US and Canada.

A Numis buy recommendation helped Turbo Genset touch 19 1/2p and close 1/4p dearer at 16 3/4p. The broker is particularly bullish on news that the company has gained its first commercial US orders for turbine-based generator products.

Analyst Andrew Gollan said the contract with a US landfill operator in the Midwest to generate electricity from landfill gas to sell back to the grid is a milestone for TG. The shares should rally sharply. Its price target is 55p.

XP Power blew a fuse at 400 1/2p, down 30 1/2p. Deputy chairman James Peters recently sold 280,000 shares at 400p and director John Dyson has now sold 10,000 shares at 400p.

ALTIUM Securities advised clients to say Hi-de-Hi to Aim-quoted caravan park operator Parkdean, 10p up at 197 1/2p, which continues to trade in line with expectations. It has been fully booked during the school holidays and mixed summer weather has made no impact on revenues. Further acquisitions are on the cards but management will not overpay for sites.