Market report: Wednesday close

By Mickey Clark for MailOnline
Updated: 04:39 EDT, 25 September 2008

It's been a few days of differing fortunes for those investors who took up shares in the massive placings launched last week by Barclays and its rival Lloyds TSB.

Wall St: UK stocks are expected to take their leasd from America

On Thursday of last week, Barclays raised a further £701m via a placing of 226m new shares at 310p. Today the Barclays share price fell 14¼p to 343p, still a profit of over 10% on the original investment.

By contrast, Lloyds TSB chose to raise an extra £767m by way of a placing of 284.4m shares at 270p. That price was this afternoon down 5¼p at 267p, still below the original price.

Only last week, the market was rocked by news of Lloyds' £12.2bn all share shotgun merger with HBOS. HBOS stock closed down 0.9p at 181.1p. Britain's biggest mortgage bank raised £4bn by way of a rights issue at 275p this summer which has left those investors that took it up and the underwriters seriously out of pocket.

Meanwhile, Bradford & Bingley sank ½p to a new low of 24¼p. Last night the credit rating agency Fitch downgraded the buy-to-let mortgage provider's long-term issuer default rating from BBB+ to BBB-, while rival standard & Poor's cut its short-term credit rating from A-3 to A-2. At the same time, B&B has had to renegotiate a loan purchase agreement with finance giant GMAC. KBW has also slashed its target for B&B from 35p to 25p. All week there have been rumours swirling around the square Mile that the City regulator has been trying to line up another bank to buy the business.

Billionaire Warren Buffett's decision to buy $5bn (£2.6bn) of preference shares in cash-strapped US investment-bank Goldman Sachs helped soothe the frazzled nerves of stock market investors and provided steadier trading in London today. The preference shares yield 10%, but the wily 78-year-old Buffett has warrants on a further $5bn worth of ordinary shares at $115. His commitment to Goldman has lightened the gloom while America's politicians continue to wrangle over treasury secretary Hank Paulson's $700bn bank bailout. (More on Warren Buffett's investment... but also: Buffett: This is an economic Pearl Habour

In the wake of yesterday's sell-off, the FTSE 100 index managed to restrict the loss today, closing at a more modest fall of 40.55 to 5095.57 in thin trading conditions.

Improved terms from France's EDF lifted our own nuclear power generator British Energy 41p to 765p. Centrica, which has also won the right to take a 25% stake in the building of any future nuclear power plants, rose ½p to 331p.

Quoted stockbroker Investec fell 9½p to 336¾p after it emerged that Odey Asset Management, run by financier Crispin Odey, had built up a disclosable short position in its shares. US fund manager AQR Capital Management has also emerged with a disclosable short position in Investec. Last year Investec bought Kensington, the UK's biggest subprime mortgage lender. BHP Billiton, up 5p at 1440p, has warned it may withdraw its offer for Rio Tinto, down 31p at 3992p, if regulators force sell-offs that affect the rationale of the bid.

Steelmakers have raised concerns that a combined BHP/Rio would have too much power to influence iron ore prices. But BHP chief executive Marius Kloppers believes bringing the two together will benefit customers by bringing on new sources of supply quicker. The timetable for the deal remains unchanged with regulatory approvals expected in the run-up to Christmas, after which BHP will have 28 days to post an offer document followed by a two-month offer period.

Amec rose 16½p to 677½p. The news that US fund TIAA-CREF has bought a 3.1% stake wiped out concerns raised by Oriel Securities about Toscafund's decision to reduce its holding from 11.4% in March, to back below the non-notifiable 3% level in early September.

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Tomorrow's agenda

Nightclubs group Luminar has a trading update tomorrow and investors are bracing themselves for bad news. The company behind the Oceana, Lava and Liquid brands is widely regarded as well-run. But the club industry has been buffeted by the smoking ban, rises in alcohol duty and the preponderence of latenight bars. Unfairly blamed for binge drinking, the industry is under attack on all sides. The shares are down from a year high of 639p to well under 200p now.

United Utilities, which used to be known as North West Water and which also operates power networks, updates the market on its first half. Key to UU's future is the upcoming review of customer bills which all the water companies want increased to pay for new investment. Also of interest will be any signal on the future of Philip Green, who has been chief executive for three years. Tittle-tattle has it that he may have a new job in his sights.