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Yesterday's trading: Don't bank on blues

By Geoff Foster for MailOnline
Updated: 03:33 EDT, 26 March 2008

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Whatever you do, don't chase the blue, because there's more credit crisis grief to come.

Daily Mail's Geoff Foster

That advice was handed down from above to many traders in dealing rooms but it fell on deaf ears. The London market returned from a four-day Easter break with a bang.

Wall Street's 455 point two-day bounce and the 1,000 point overnight push in the Hang Seng helped the Footsie shoot 209 points higher before elevenses. It closed 193.9 points, or 3.5%, up at 5,689.1, while the FTSE 250 soared 346.2 points to 9.794.6.

Some profits were shrewdly taken off the table when Wall Street fell 99 points in early trading following news that US consumer confidence slumped to a five-year low in March. Another survey also showed that house prices fell 11.4% in January, the steepest decline since 1987.

Some £6m-worth of share buying by directors of battered HBOS helped promote hopes in some quarters that the worst of the global financial credit crisis could well be drawing to a close.

While the Financial Services Authority continued its wild goose chase of trying to find the culprits who spread last week's scurrilous rumours about the bank's well-being, the shares rocketed 70¾p to 544½p. Chief executive Andy Hornby bought a short £500,000-worth at 446.48p, while non-executive director Charles Dunstone acquired 100,000 shares at 446.25p.

It gave the beleaguered sector a lift. Royal Bank of Scotland advanced 30p to 351¼p, Barclays 30p to 459p, Lloyds TSB 27½p to 461¼p and Standard Chartered 108p to 1790p.

Hedge fund manager Man Group firmed 15p to 537p despite continuing rumours circulating about MF Global, in which it retains an 18% stake. The demerged former Man Financial futures and options brokerage last week said that repeated rumours regarding its liquidity position are without merit and it retains close to £700m in unused committed liquidity facilities.

Fair enough, but dealers at its London operation have apparently been forced to stop trading, particularly in contract for difference (CFDs). Clients' margins were also hoisted to between 75% and 90% from 10%-15% and many were given short notice to close positions. As a result, quite a few have taken their business elsewhere. Apparently, spread-betting group IG (12¼p better at 318¼p) has been a major beneficiary.

Directories group Yell, which gets relegated from the Footsie today, screamed 17p higher to 155p after broker ABN Amro advised clients that the recent fall has been overdone.

Housebuilders were through the roof after the better-than-expected 2.9% rise in US home sales in February. The sector also has the whiff of an early April cut in UK interest rates in its nostrils. Taylor Wimpey, which also drops through the Footsie trap-door today, rose 19½p to 183.3p. Persimmon added 71½p to 770p, Barratt Developments 39¼p to 417¾p and Bovis Homes 74p to 597½p.

Miners hit a richer seam with Vedanta Resources 142p up at 2044p. Kazakhmys rose 107p to 1542p after Lehman upgraded with an £18 target and the Kazakhstan government said it was interested in buying a 15% stake.

Government plans to take all tobacco products off display and for retailers to give more prominence to tobacco replacements such as nicotine patches and chewing gum left British American Tobacco a sticky 58p lower at 1822p. Imperial Tobacco lost 55p at 2300p.

Talk of a pending upbeat circular helped DSG International put on 7¾p at 66p.

Canadian nickel miner Landore Resources edged up 1p to 16¼p on talk of an imminent bullish update on its Junior Lake project in Ontario. Word is the resource estimate will come in 50% above expectations.

Banks in crisis

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News that the Russian Finance Ministry is proposing a significant tax break for Russian exploration and production companies helped Imperial Energy gush 67p to 1302p. It plans to reduce the Mineral Production Tax for oil companies by about £2bn in 2009. Mediterranean Oil & Gas rose 4p to 97½p on hearing it has begun drilling the Ombrina Mare 2 appraisal well in the Adriatic Sea, offshore Italy. Apparently, it is the first offshore well in Italian waters to be operated by a junior oil and gas company for more than 25 years.

Interactive gaming firm NetPlay TV added 2¾p to 20¾p after signing Jim 'Bullseye' Bowen, plus Cannon and Ball to join host bingo presenter Gregg Scott for the launch of Celebrity TV Bingo.

• Copper and uranium miner Kiwara, unchanged at 21p, should get a lift when the stock gets a quote on the Johannesburg bourse. That is bound to attract some of the big South African funds. Meanwhile, an imminent placing to raise around £750,000 will fund further drilling in western Zambia. Geiger Counter will be taking more stock which will increase its shareholding to more than 8%.

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