DRUG shares, for so long in the doldrums, displayed the occasional flicker of enthusiasm as US investors at last made modest buying excursions.

Much of the attention centred on Medeva. The fast-growing group has managed to avoid the sickness that has prompted the sector to turn in one of the worst stock market performances.

The shares rose 3p to 231p, just below their 1993 high, as stockbroker Panmure Gordon said buy and a well-regarded US investment letter forecast heady growth. PG is looking for profits of pounds 58m this year and pounds 73m next. The Sturza Medical Investment Letter predicted the shares would hit 460p in two years.

Medeva is probably the least understood of the drug shares, with many unimpressed by its rapid growth through acquisitions. But support is growing. Since August the shares have climbed from 143p.

SmithKline Beecham led the heavyweights higher, up 11p to 436p, following the UK approval of over-the-counter sales of its Tagamet anti-ulcer drug. Wellcome improved 20p to 678p and Glaxo Holdings 5p to 665.5p.

Fisons missed the recovery, slipping 1p to 178p. Zeneca, still seen as a possible bidder for Fisons, dipped 2p to 617p.

The rest of the market was mixed. Blue chips recovered early falls with the FT-SE 100 index swinging from an 18.9 points loss to a 0.2 gain at 2,848.3. But the FT-SE 250 index, measuring second-liners, ended 12.2 down at 3,219.9.

In early trading, shares were unsettled by the sharp overnight reverse in New York, the poor Dixons results and the growing understanding that further interest rate cuts are a long way down Chancellor Kenneth Clarke's list of priorities. But then the tariff accord in Tokyo and a firm New York opening encouraged a little blue chip interest, although trading remained quiet.

Dixons ended 15p down at 195p, ruffling other retailers. Great Universal Stores 'A' lost 35p to 1,710p.

Supermarket shares continued to feel the impact of Asda's warning of over-capacity, although the J Sainsbury shareholders' meeting eased the anxiety. Sainsbury, at one time down to 443p, ended at 456p, up 2p. Tesco rose 2p to 209p and Argyll was unchanged at 313p. Kwik Save had another unhappy session, falling 6p to 715p.

Even Asda recovered most of its fall, ending just 0.25p off at 62.25p. The shares have fallen from 71.5p since the company's warning on Friday, which accompanied its profits recovery.

Analysts' comments took their toll. United Biscuits encountered another revision, with Barclays de Zoete Wedd cutting its forecast from pounds 211m to pounds 206m. The investment house regard the shares, down 3p to 374p, as a sell. Hillsdown Holdings dipped 2p to 141p on a Credit Lyonnais Laing downgrade.

Bass felt the impact of negative comment from at least two securities houses, falling 10p to 455p. Whitbread 'A', down 13p to 477p, remained flat on fears so-called 'parallel' imports will hit its lager sales.

The nervousness has developed because Tesco is importing from the Continent Stella Artois lager, one of the overseas brands Whitbread produces under licence. 'Parallel' importing has encouraged Tesco to cut the lager's price by 25 per cent.

Ladbroke, the betting and hotel group, shaded 2p to 182p following a downgrading. Forte, however, shrugged off a downgrade, ending unchanged at 226p.

Bespak, the medical equipment maker, jumped 56p to 518p following its results. The share were nervous ahead of the figures.

AAF Industries, the South African group, plunged 66p to 125p on its profit warning.

The day's newcomers did well. Field, the packing group offered at 250p, closed at 279p; Policy Portfolio, issued at 130p, ended at 140p. Tea and transport group Moran Holdings, suspended at 133p, returned after a rescue revamp, including a rights issue, at 35p. Celsis, after Tuesday's disappointment, moved to 107p.

Airtours, holding investment meetings, shaded 1.5p to 375.5p. MFI Furniture, the flat pack retailer, suffered from bearish comments, falling 6.5p to 125p. Results are due on Monday and are expected to be disappointing.

Gold shares were strong after the bullion price stretched to its best level since the Gulf war. Monarch Resources rose 13p to 184p.

Tilbury Douglas, the construction group, failed to respond to a buy recommendation from Yamaichi, the Japanese securities house. Interim profits will include a pounds 7m exceptional profit but underlying profits will be down. But Yamaichi expects the year's profits to surge from pounds 3.8m to pounds 25m. The shares fell 4p to 593p.

Millwall Holdings fell 1p to 3.75p after the mystery investor abandoned plans to take a stake in the football club. Maddox, the electronic group, also lost 1p to 3.75p. It was hit by the worry over the value of pounds 15.1m worth of bonds paid for two businesses sold earlier this year.

Molynx, the closed circuit television group, jumped 6.5p to 30.5p. It has for long looked vulnerable to a bid and in May there was high excitement when stories circulated that a US strike was being lined up.

The FT-SE 100 index, at one time down 18.9 points, closed with a 0.2 gain to 2,848.3 but the FT-SE 250 index lost 12.2 to 3,219.9. Turnover was a modest 586.2 million shares with 25,357 bargains recorded. The account ends on 16 July with settlement on 26 July.

Murmurings of discontent over the Postel rescue plan for the ailing Greycoat property group are being heard. There is talk that some institutions are unhappy about the terms and intend to oppose the scheme. There is particular anxiety over the terms being offered to preference shareholders. Greycoat shares were unchanged at 17p. Brisk activity in the preference shares left the price at 39p.

The Clegg connection with Anglo Irish Banks has ended. The 14.98 per cent stake held by Jayne Wright, which represented the interest of John Clegg, former chief of the Wace printing group, and his family has been sold to institutions. At the 55p closing price it was valued at pounds 10m. Mr Clegg left the Bank in February last year when he stepped down from Wace, where he was managing director.

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