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London equities sharply higher

LONDON: Equities soared today, propelled by Rhone-Poulenc Rorer's bid for Fisons.

Key resistance points that had kept shares in a narrow trading range for the past two weeks have been breached, setting the stage for an assault on the FTSE's all-time highs next week, dealers and strategists said.

"I think we are going to do it. We might see a dip below 3,500, but we will test the highs soon," said Kirit Shah, strategist at First Chicago. The FTSE 100 ended 39.2 points firmer at 3,509.8, just 10.5 points below its all-time closing high of 3,520.3, set on February 2, 1994.

Technical analysts said the breach of the important resistance level of 3,488 should be enough to trigger a further push towards 3,539.2, the FTSE's all-time intra-day high point.

"We could go as high as 3,550 before profit-taking sets in," Shah said.

Shah believes any downward correction will be short-lived and says the FTSE could push well above 3,600 in the coming months, provided Wall Street remains firm.

"If the Dow heads toward the 5,000 level as many predict, the FTSE will follow -- perhaps all the way up to 3,700 by the year end."

"I am still cautious. I don't think we should get too excited. The best strategy here is to reshuffle one's portfolio. If you are dollar bullish it may be a good idea to look at dollar earners," he said.

Dealers said the only thing that could prevent the FTSE from reaching a new peak over the next few sessions would be a general lack of trading volume.

Many UK fund managers are not expected to return from their summer holidays until the first week of September, they said.

"It's going to be a very funny, abnormal week next week. Volumes haven't been huge. A few fund managers will start to drift back next week but with a tube (underground railway) strike on Friday (August 25) and a bank holiday the following Monday it is unlikely they will want to deal," one dealer said.

News of the Rorer bid for Fisons should underpin prices and limit any downside correction, dealer said.

"The market likes these takeover bids. It attracts the buyers. We could see a bit of profit-taking if we break the record (FTSE highs) but I don't see any large selling coming in," another trader said. Fisons closed 71-1/2 higher at 264-1/2p after Rorer's 1.7 billion stg bid, which the UK pharmaceuticals group said seriously undervalued its shares.

Zeneca fell 8p to 1,099p on speculation that it could mount a bid for Fisons.nL1848028

Elsewhere, Pearson dipped 4p to 618p after reporting lower than expected first-half pre-tax profits of 50.5 million stg. nL187239

British Airways skidded 3p to 441p amid talk that broker James Capel had repeated its "sell" stance. -Reuter