Market report: Thursday close

THE talk was all about booze in the market today. Better-than-expected earnings figures from

Diageo leaped 24 1/2p to 623 1/2p, helping Allied Domecq up 6 1/4p to 287p. Allied, the world No.2, had weighed on the market since its recent downbeat profit message.

Scottish & Newcastle was also aided by the Guinness and Smirnoff group's numbers, gaining 5 1/2p to 354 1/2p.

Investors were glad to hear Holsten of Germany deny speculation that it was a bid target. S&N had been cited as an obvious candidate after a mystery buyer picked up 14% of Holsten.

Six Continents continued to advance, up 25 1/2p to 615 1/2p, as Hugh Osmond said that any bid would be conditional on its planned demerger not taking place. The market is still saying this is a deal too far for Osmond and that he needs some back-door deals to sell off some of those prized Six Continents assets.

The US trade deficit widened to rein back earlier gains in London and the FTSE 100 index slipped back below the 3700 mark, closing 28.9 higher at 3687.2.

Leading banks such as Lloyds TSB and Standard Chartered took a beating from the analysts. UBS cut its target price on Lloyds TSB to 330p from 480p leaving its shares adrift by 11p at 394 1/4p. Standard Chartered was put on reduce from hold by Dresdner Kleinwort Wasserstein, leaving the bank down 5p at 703p.

The proposed dumping of £670 million of family-owned shares in Dettol-to-Lemsip group Reckitt Benckiser got off to a slow start with Morgan Stanley placing 25 million shares at 940p. The shares also suffered a savage UBS Warburg downgrade in target price to 1100p from 1360p, but rallied 25p to 965p. Traders cited bargain hunters after yesterday's heavy falls.

Hunting safe-and-sound yielders was the name of the game, and any stock paying above the blue-chip average of 4% was in demand. The trouble is that those with double-digit yields, such as Abbey National at 12% and Invensys at 11%, are the ones in deep trouble.

Dealers preferred to look for yields of less than 6%, such as those at GKN, down 2 1/2p to 162 1/2p. Lehman Brothers lopped its target price for Invensys to 25p from 60p, and the shares hit a new low before recovereing to end off 1/4p at 17 1/2p.

Morgan Stanley is worried about the proposed merger between Carlton and Granada and has cut savagely its targets for the TV groups. On Granada, it has reduced to 60p from 80p, leaving its shares down 3 3/4p at 57 1/2p, a new low. For Carlton, its target is 75p from 124p and the price today slipped 5p to 98 1/2p.

UBS Warburg placed Pillar Property on its buy list, increasing its target price to 435p from 420p. The group recently announced a joint venture on a 90-acre site in Glasgow, and its shares climbed 2 1/2p to 378 1/2p.

Builders' merchant BSS made its first acquistion, shelling out £31.7 million for heating and plumbing group Tricom. It is expected to be earnings-enhancing in its first year, boosting BSS 55p to 427 1/2p.