Wallflowers could soon be blooming

THE stock market's wallflowers are about to get their revenge. Famous names, including

Those ready to take their place include long-neglected sugar company Tate & Lyle, up 3p to 353p, and packaging group Rexam, down 8p to 435p. Eighteen months ago, not one City analyst recommended Tate shares. Making a comeback, too, is Greg Hutchings' old conglomerate Tomkins, under new management and up 5p to 235p. Cambridge chip designer ARM Holdings, up 16 1/2p to 182 3/4p, is also a contender to move back into the Footsie.

Big names have taken a bath in the market meltdown. BA has been pummelled by the air travel slump. EMI, down 1 1/4p to 183 1/4p, like the entire music industry, is struggling to find exciting new acts. RSA, up 3p to 108p, is dogged by fears that it may have to launch a rights issue.

Bijal Shah, market strategist at SG Securities, says the rise of defensive, 'value' stocks reflects the gloomy outlook. 'The companies going into the Footsie are simply those which have not fallen out of bed. Defensives are likely to perform well over the next 12 months.'

The FTSE 100's quarterly changes are due on 11 September, with the threshold for entry now just £1.63bn, barely half the figure two years ago.

After falling 22 points in early trading, the Footsie recovered strongly to finish 96.8 up at 4426.8. The surge was helped by strong gains on Wall Street as investors took heart from a smaller-than-expected decline in July's index of economic indicators. Sterling fell a cent to $1.5280. The euro was worth 64p and 97.8 US cents.

Attention turned to the clothing sector after Philip Green's indicated bid for Arcadia, up 39 3/4p to 340 1/4p. Broker Numis thinks the offer may encourage other parties to take a look at the sector. It thinks New Look, up 12 1/2p to 236 1/2p, and Alexon, unchanged at 167 1/2p, stand out as undervalued.

It also tips furniture retailer Courts, up 12p to 245 1/2p, highlighting the £25m gap between the £170m value of its stakes in overseas subsidiaries and its £145m market value.

Babywear retailer Mothercare rose 9 3/4p to 143p. KBC Peel Hunt changed its rating from 'sell' to 'hold' amid hopes that former BhS chief Terry Green will take charge. He is seen as being able to sort out the ailing chain.

Reuters jumped 22 1/2p to 283 1/2p on rumours that it is in line for a major contract from US broker Merrill Lynch. Reuters is playing down the story, but the word is that the information group has beaten Bloomberg and Thomson Financial to the deal, worth £650m over five years. Director Richard Olver snapped up £19,649 of the shares.

BP rose 11p to 530p as crude oil hit $27.27 in London and nearly $30 in New York. Kuwait said it did not expect Opec to ease supply curbs.

In telecoms, mmO2 buzzed up 4 3/4p to 48 3/4p.

Six Continents was 29p dearer at 638 1/2p on reports that investors are calling for a break-up of its hotels and pub business parts, which have been valued on a stand-alone basis at 20% more than SC's £5.3bn market value.

Housebuilders were in focus after positive comments from broker Merrill Lynch. It rates Persimmon, up 16 1/4p to 445p a 'strong buy', with a target price up from 450p to 500p. ML repeated its 'buy' advice on Bovis, up 15p to 396p, and Redrow, up 6 1/2p to 278 1/2p.

Biotech CeNes Pharmaceutical lost 1/4p to 3 3/4p after announcing all talks regarding a possible sale or merger were off.

A second profits warning this year sent shares in fallen tech star Kewill Systems tumbling 4 1/4p to 14 1/2p. The group blamed the US downturn. It expects a 'material operating loss' in the first half, and may not break even at the operating level for the full year.

The Queen's dotcom investment Getmapping.com jumped 6 1/4p to 11p. It is to provide the Ordnance Survey with colour aerial photography of Great Britain, despite a legal dispute with the OS.