Shares surge as confidence returns

BEARS took another bashing as shares responded to growing optimism that both the US and UK will see a strong recovery in earnings growth next year. With the Fed expected to cut US rates again early next month and another member of the Monetary Policy Committee calling for a drop in UK rates on November 8, the

It had started on a firm footing following Wall Street's impressive overnight surge of 172 points. The Dow Jones climbed a further 62 early yesterday, with US investors slowly regaining confidence following the traumas of September 11 and believing that the Fed's interest rate medicine will work.

Billionaire speculator George Soros expects the US economy will begin to recover at the end of the first quarter in 2002.

It was blue skies all the way for British Airways, 19 3/4p higher at 159 1/2p. Investors anticipate closer links with KLM, the Dutch flag carrier. BA and KLM are discussing ways to cut costs and boost revenues by co-operating with each other and with other European airlines.

BA also got a lift from Concorde, which completed its first round trip from London to New York since the Paris tragedy.

Mobile phone operators buzzed higher after Orange boasted that full-year results would be above analysts' expectations. Hoping that the worst is over for the industry, Vodafone advanced 4 1/4p to 169 1/2p. British Telecom rose 25 1/4p to 367 1/2p after shareholders approved the demerger of its mobile operations at its egm in Birmingham. Cable & Wireless improved 25 1/2p to 342 1/2p. IT group Sage firmed 12 1/2p to 205p as dealers gave the thumbs-up to its acquisition of 59% of French accounting company Coala Informatique and its offer for the remaining 41%.

Debenhams' warning that current sales growth has slowed sent a shudder through the retail sector, which is nervously approaching the crucial Christmas trading.

WestLB Panmure analyst Emily Shamma is particularly cautious about prospects for clothing retailers. She suggests a pre-Christmas slowdown is a real possibility. This, together with high stocks, means a risk to fashion retailers in the face of even a slight waning in consumer confidence.

Marks & Spencer fell 14 1/2p to 296 1/2p, Burberry owner Great Universal Stores lost 18p to 518p, Next lost 7 1/2p to 938p and Matalan slipped 15 1/2p to 500p.

The clearance of a big seller helped Innovation Group rise 30p to 235p.

Superscape crashed 14p to 23 1/2p after the board said it was scaling back revenue expectations for the second half. With 44p in cash on the balance sheet, dealers now believe Superscape could attract a bid. It already has a close collaboration with ARM (36p better at 350p) and so could easily tie up an agreed deal with the microprocessor group.

Premier League football club Newcastle United scored a gain of 7p at 38p on hopes that the Shepherd family's decision to raise its stake to 18% is a precursor to taking the club private.

Higher up the league, Manchester United firmed 3 1/2p to 127 1/2p amid speculation that Irish multi-millionaires John Magnier and JP McManus will lift their stake from 8.6% to 10% before the November 15 agm. BSkyB (23p better at 804p) is the biggest shareholder with 9.9%.

Aim-listed Oxus Mining sparkled with a gain of 2 1/2p to 9 1/4p after doubling its gold and silver resources in Uzbekistan. European Diamonds glittered at 179 1/2p, up 14 1/2p, after discovering kimberlite-type material at its Lentiira property in central Finland.

Hopes that today's agm will be upbeat helped Hereward Ventures, which has exciting prospects in Bulgaria, to harden 1/2p to 9 1/2p.

Techno minnow TransEda rose 4 1/2p to 22 1/2p. Chairman Chris Wright told the agm it is winning new business, and revenues are substantially ahead of last year.

KEEP an eye on Aim-listed shell Abinger, at 1p. Run by Stephen Barclay, former deputy chairman of Seymour Pierce, and John Shaw, ex-head of SP's corporate finance department, it is said to be on the verge of acquiring a private client stockbroker as well as a regulated corporate finance business. Barclay's aim is to replicate the success of SP. He is well known for pulling off a string of sexy, small corporate deals.