Yesterday's trading: Standard bearer for the Footsie
Asia-focused bank Standard Chartered showed the rest of the Footsie a clean pair of heels, soaring 173p on further consideration of its proposed £1.8bn rights issue before closing 115p higher at 840p.
Geoff Foster: Daily Mail
Chief executive Peter Sands told markets on Monday that the bank did not really need to raise capital, but said investors were keen for it to bolster its finances during the current turbulence.
Fair enough. But a jackanory doing the rounds suggests that Sands wanted the cash to help finance an earnings enhancing acquisition which could be launched before the end of the year.
Oriel Securities' analyst Mike Trippit said: 'The bank's rationale for a rights issue - 30 for 91 at 390p - on a "business as usual basis" was not entirely convincing.
'It seemed as if the announcement was the capital raising section of an acquisition announcement. It's interesting to note that both RBS and Citigroup are reviewing all parts of their portfolio including Asia assets.'
Barclays, which on Monday gained grudging support from shareholders for its £7bn fundraising, jumped 20½p to 167p on a combination of bear closing and brave buying. Soon to be merged with LloydsTSB (13.3p better at 160.9p), HBOS jumped 11p to 97p which compares with the recent low of 59.9p.
Not to be left out, HSBC advanced 39¾p to 689¾p. Chairman Stephen Green has said the group would buy some of Citigroup's business if the US bank decided that it required further capital in addition to the government's latest bumper cash injection.
Royal Bank of Scotland added 2.8p to 53.6p as its giant City fundraiser. With the stock still trading well below the offer price, it appears that the government, which said it will buy all shares not taken up by investors, will be left sitting on a 58pc stake. Brighter banks helped the Footsie follow Tuesday's record 9.8% rise with a further rise of 18.29 points to 4,171.26. It was a struggle though because it initially fell 83 points after miner Rio Tinto's catastrophic collapse of £9 to 1550p after BHP Billiton (13¼p up at 511p) pulled its hostile £38bn takeover bid. BHP's shareholders must be horrified. The yearlong saga has cost the world's biggest miner an absolute fortune in advisory fees.
Extending its biggest two-day jump in over 20 years, Wall Street surged 164 points further at the outset after the Federal Reserve Bank pumped additional billions into the market. Some £600bn will buy mortgage related debt and securities plus $200bn of customer debt securities. Sellers later appeared when dealers heard US home prices plunged a record 17.4% in September. The Dow closed 36.08 up at 8479.47.
Merrill Lynch pulled the plug on BT, 4.8p lower at 130½p. The stock had rallied 25% from its low point of late October and so the broker downgraded to neutral from buy. It is concerned about the pension deficit and the likelihood of a dividend cut and assumes this will be slashed to 10p from 15.8p.
Chairman Jonathan Davie's purchase of 90,000 shares at an average price of 183.3p helped spreadbetting firm IG Group rally 8¼p to 211¼p. It recently announced an increase in bad debts following October's blood letting in the market.
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The roof caved in on housebuilders for the umpteenth time following news mortgage lending fell sharply during October, after a slight rebound in September. Persimmon plummeted 20½p to 221p and Barratt Developments 8½p to 47p.
Specialist drugs discovery group Immupharma soared 14p to 56½p after announcing a global licensing deal for its lead product Lupuzor, which treats chronic rheumatic disorder Lupus, with America's speciality pharmaceutical company Cephalon. Broker Panmure Gordon reiterated its buy recommendation and lifted its target price to 234p from 194p.
Nighthawk Energy, the North American oil and gas operator, firmed ¾p to 28¾p after raising £5m in a placing of 25m shares at 20p. The shares fell to 23½p initially because dealers were surprised to see the management seek a fundraising at current levels. They had been led to believe that asset sales would be made first. Conroy Diamonds edged up ½p to 2⅜p after discovering four previously unknown gold zones adjacent to its Clontibret project in CO Monaghan which sits on a 1m ounce gold resource.
Enegi Oil, the Newfoundland focused oil and gas company, gushed 11½p to 60p following a positive drilling update on its Garden Hill South programme, with hydrocarbons being encountered in the well.
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