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With professional punters away at the races, reduced pressure on interest rates could be good for sentiment. It all provides a good background for miner Brancote and diagnostic group Medical Solutions. Peter Shearlock reports.

You should never read much into what the market does during Ascot week - one half of the City is off hobnobbing with the quality and the other half is using their absence for the chance to take long lunches. It won't change much next week, what with Wimbledon and the Lord's test.

But, on the whole, I'm mighty encouraged by the tone of this market. The high-tech Nasdaq market in the US has shown itself to be pretty resilient at current levels and, unless there is a sudden shock from the Federal Reserve next week when it meets to decide on interest rates, there is a better than evens chance of a summer rally - something that happens more years than not, just as the big boys are heading for the beach.

There are similar signals on the macro front in Britain. The property market has unquestionably peaked for now in the south east and that could remove the pressure on the Bank of England to lift rates here.

It's been quiet on the small company front but there is a lot happening beneath the surface. Take gold miner Brancote, for instance.

When I tipped the shares in the Growth Company Investor Weekly Digest three weeks back, I did so on the basis of a forthcoming statement that was likely to pave the way for a tie-up with a major mining group - or some other corporate move. A week later the company came out with drilling results instead - though they were good enough to put the shares better, anyway.

But, last Thursday, the company did make a statement of the kind I was looking for - and what a statement, too. In tandem with news of another share placing to help fund further exploration on the Argentine mining concessions, Brancote announced it was undertaking a strategic review that could result in continued independence, a joint venture, or even the sale of the whole company.

It also made it clear there had been no offer for the company and the review process could take some time. The shares ran to 137p but have since come back to 128.5p (which compares with my recommendation price of 112.5p). But it does look as if the company has put up the 'for sale' sign - and been obliged by the Takeover Panel to put out a statement.

My view is that the company will go out for something in excess of £2 a share - though it will take a while before a concrete offer is made. Still worth tucking away.

I also like the look of cancer diagnostics business Medical Solutions. Turnover of 7.3 million shares was recorded on Thursday last week, clearing an overhang that had held the price back. That was followed by the publication of a strong buy note from house broker Teather & Greenwood. The shares, which have been as high as 51p this year, are worth picking up at 35.5p.

Teather reckons the company will move into significant profit this year. But, say those close to the situation, its forecast of a profit of £1.39 million for 2000 could prove conservative. Profits are expected to double in 2001. After the recent £19.7 million placing and open offer the company has net cash.

Recent acquisitions will provide the cash flow to finance the development of the core imaging business, which has won a contract to supply 3M with imaging workstations and it is getting its installations into hospitals as far-flung as Sweden and Japan. Two directors were buyers of the shares in April at 37p. Attractive.

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