London shares retain strong gains in thin midmorning deals, led by telecoms

LONDON (AFX) - Leading shares retained their strong early gains in meagre midmorning trading, still fuelled by gains in telecoms issues, with fund managers indulging in some end of year window dressing ahead of the new tax year starting April 1, dealers said.    At 10.15 am, the FTSE 100 index was trading up 69.1 points at 5657.5 -- with all the wider indices trading in positive territory. 333.6 mln shares had changed hands in 24,104 transactions.    Overnight, the DJIA closed up 13.71 points at 9,799.06, while the Nasdaq composite was down 33.56 at 1,820.57. In Asia, the Nikkei 225 index closed down 72.66 points at 12,999.70, with the Hang Seng ending the morning session up 19.93 points at 12,697.82.    The key to medium-term sentiment will be a raft of data from the U.S., which investors and traders alike will be examining for clues on the health of the U.S. economy and consequent moves in U.S. interest rate policy.    One of the key data for the market will be the March Chicago purchasing canagers' index, which is expected to show its second consecutive rise to around 44-44.5 pct, from February's 43.2 pct. Attention will also focus on the final University of Michigan consumer sentiment figures for March, with the preliminary release for the month showing a surprising bounce to 91.8 from 90.6. Some players fear a small downward revision, largely due to the continued weakness of equity markets.     Earlier on, the market will examine the U.S. March personal income and consumption data -- especially in the wake of the weak retail sales data for February.    Negative features in London were largely provoked by bearish broker oecommendatins, with Shire Pharma dropping 5 pence at 1132 after HSBC initiated the stock with a 'sell' recommendation and 1010 pence price target, while Hilton Group was down 3/4 at 206-3/4 after Credit Lyonnais Secs (Europe) advised to 'reduce' the stock in a Pan-European hotel and leisure review this morning. Bass, advised a 'neutral' by Merrill Lynch, shed 6 at 668.    ICI was still a notable blue chip faller in midmorning deals, losing 12-1/2 at 436, as investors digested a report in the Daily Mail that it could caution on profits due to difficult trading at its National Starch business. Sector watchers, however, were a little more sceptical, saying the chemical giant may instead to choose to guide estimates down ahead of first quarter figures in May.    Marks & Spencer was 8-1/4 lower at 258-1/2 on news that Goldman Sachs has cut its EPS estimates on the retailer and news that UBS Warburg has cut its stance to a 'reduce' from the previous 'hold' -- but revised its price target upwards to 225 pence from 299 pence. Credit Lyonnais advised the stock a 'sell' and SG Securities recommended it an 'underperform'.    Positive early features were scarce among the blue chips, though selected telecom stocks moved back into the black. BT was up 17-1/2 at 532, as investors warmed to reports, in this morning's Financial Times, that the group has been sounding out investors on its much awaited debt reduction plans.    Fellow telecom gainers included Colt Telecom, 15 higher at 785, Telewest, up 3-1/2 at 119 and market heavyweight Vodafone, up 3 at200.    AstraZeneca was inspired by news it is seeking FDA approval for its Faslodex breast drug after successfully completing clinical trials -- its shares were 86 higher at 3332.     Nycomed Amersham continued to be supported by Merrill Lynch's recent upgrade to 'buy', as it led the FTSE 100 list of early risers, putting on 11-1/2 pence at 477.    Shares in Rio Tinto extended their recent rally after Lehman Brothers initiated coverage with a 'buy' rating, pointing out that the mining group's diversified focus offers more opportunities to grow and reduces risk. Rio shares were up 35 at 1225.    Selected tech stocks saw good gains midmorning, as investors moved back in to certain attractively priced issues after recent falls: Logica gained 36 at 1051, ARM Holdings was 10 higher at 326, Sage Group firmed 5-1/4 at 260-1/4.    Meanwhile on the second line, Biocompatibles advanced by 10 to 242-1/2 as the Investors' Chronicle advised readers to 'buy' the biotech group and Autonomy was 43 higher at 710 after announcing it has launched Autonomy in Asia.    Gains in Lex Service were prompted by the group's acquisition of Auto Windscreen for 112 mln stg in cash and debt -- its shares firmed 24 at 482-1/2.    Carphone Warehouse added 10-1/2 at 132, as UBS Warburg highlighted the mobile phone retailer's attractions and increased their stance to 'buy' from 'hold', while Cookson shrugged off news of a downgrade to 'sell' from 'hold' by Soc Gen this morning, firming a penny at 153-1/2.    Shares in Shaftesbury advanced up the list of FTSE 250 early gainers, gaining 7 at 294-1/2 after announcing plans to sell its 10.35 pct stake in Warnford for 15 mln stg -- to Warnford Investments. The group added that it will buy eight properties in London's from Warnford, also for 15 mln stg.    Meanwhile, Warnford was a top riser on the Smaller Caps after it revealed plans to delist and proposing a tender offer at 495 pence per share -- adding 102-1/2 at 480.    However, IntecTelecom Systems topped the FTSE 250 fallers, shedding 6-1/2 to 66 after JP Morgan dowgraded the stock to 'market perfom' from 'buy' -- though Lehmans was advising the stock a 'buy' today.     Elsewhere, selected technology stocks remained under pressure, suffering from falls on the tech-laden Nasdaq index overnight, as concerns over the increasingly bleak economic outlook gathered pace: Fibernet Group lost 13-1/2 at 362-1/2, Computacentre was 12-1/2 off at 347-1/2 and Henderson Technology shed 2-1/2 at 230.    But Smaller Cap McBride suffered from a full year profits alert this morning, with investors failing to be assuaged by news that the company is still in offer talks -- McBride was down 7 at 48-1/2.    Sopheon shares were 17-1/2 off at 97-1/2 as investors shrugged off a solutions development deal with Hewlett Packard, concentrating instead on an increase in EBITDA losses at the full year mark.     However, Smaller Cap risers included Conroy Diamonds -- 5-1/2 higher at 34 -- after revealing that it sees "significant value" in its Tullybuck/Lisglassan interests in County Armagh.        Shares in AFA Systems were boosted by news of a 500 stg South African deal, adding 9-1/2 at 131, while Jermyn Investments were 37-1/2 pence higher at 520 on news it is in offer talks.    Elsewhere, a spate of results provided the only other features in early trades: Electronic Word firmed 3/4 at 4, Waverley Mining gained a penny at 3-3/4, WAP Integrators gained 1/4 at 4-1/2 and Convergence was up 2 at 25-1/2. 

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