U-turn puts the skids under BMW

It was the week of Europe, the week of gargantuan car mergers and takeovers, the week of cheers for breweries; of new jitters followed by old certainties.

But through this turmoil in which the stock market fell, held steady, plummeted then recovered one principle holds true: For all the high falutin' speculation about the influence of the new Euro and cogitation about the ripples from the fall of the yen and a dollar under pressure, one major principle was proved yet again. Namely that people buy when the stock is low, then sell when it's high.

Also illustrated was that it didn't take the formal endorsement of a new Euro currency to prove that business knows no national borders. First there was the announcement that Daimler-Benz, Germany's biggest industrial group is to merge with US car makers Chrysler in a deal which valued Chrysler alone at £23 billion.

Then, there was the question of the sale of Rolls Royce to a German firm - not whether it should be sold to a German company, but which German company? At first Vickers, owners of RR, favoured a £340 million bid from BMW then, reportedly, did a U-turn and recommended acceptance of a £430 million offer from Volkswagen.

On Tuesday, following bank holiday and the formal start of a single European currency from which Britain has so far excluded itself, the FTSE climbed 54.3 to 6064, but it was a false dawn.

The first Euro fears began. Would a rise in interest rates in Denmark trigger higher rates in Germany and all that this could mean to the Continent? Down went the FTSE ending in a loss of 23.8 to 5986.5. Still, some exporters were smiling as sterling fell to $1.6595.

There were also smiles at British Petroleum whose first quarterly earnings were £582 million, £73 million down on the comparable quarter last year, but better than the £525 million being predicted by market analysts. Its shares held firm at £9.39. Big losers were Alliance and Leicester, down 57 pence to £8.32 and Hong Kong Shanghai Bank down 73p to £18.25. Gainers included GKN, up 40p to £17.78 and engineering group Siebe, up 31p to £13.98.

Wednesday ended with little change, a flicker upwards of 0.8 to 5987. Yearly results from Sainsbury's added 22p to the share price, ending £5.02. Pre- tax profits increased from £651 million to £728 million. Dividends were up from 12.3 pence last year to 13.9 pence.

Other positive news came from Whitbread and Scottish and Newcastle breweries which both announced vast expansion programmes.

Wednesday winners: British Telecom up 29p to £6.93. GEC up 31 to £5.21, Siebe up again, this time 31p to £14.44, and Smith Industries, up 66p to £9.65. Wednesday losers: Boots was down 25p to £9.12 and Whitbread, in spite of expansion news, fell 30p to £10.60.

Thursday was driven by fear of the possible interest rate hikes in the US and the Far East.

The market plummeted 93, but ended the day down 54.4 at 5,938. Prudential Insurance fell 35p to £8.06. Among the day's winners were the Royal Bank of Scotland, up 54p on good results to £9.88; and Bass up 26p to £11.08.By yesterday, after volatility, the market had recovered - up 31.8 to 5969, basically as a result of better US economic figures showing unemployment at a 28 year low.

Barrie Bluck, of stockbrokers Redmayne Bentley said: "It demonstrated that although we now have a massive, united new currency on our doorstep, people have still not taken their eye off the ball in the US and Far Eastern markets."

And next week? Dealings start at 8.30am on Monday for Thomson Travel Group plc. On Tuesday are quarterly results for about-to-merge Commercial Union and General Accident and neither look good. Analysts expect CU to show pre-tax profits of £45 million as against £102 million last year; and GA is expected to show profits of £75 million as opposed to last year's £114 million. Expect slight improvement only for the prelims of Vaux Brewery at £15.6 million.

Cable and Wireless announces final results on Wednesday.

The above information may not be suitable for all private investors. Redmayne Bentley has taken every step to ensure accuracy, but neither it nor the Evening Press can accept any liability for errors.

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