FTSE in-depth: Gulf rescue lifts investor gloom
The London Stock Exchange had a stellar session, bouncing back 10% or 69p to 763.5p as investors wagered that its biggest investor wasn't about to unload its stake.
Taking stock: We round-up yesterday's action.
State-owned Borse Dubai owns nearly 21% of the exchange and LSE's shares have tumbled more than 15% since the Gulf emirate's debt problems came to light, amid fears it could sell the holding to help it cut its borrowings.
News that its neighbour Abu Dhabi had ridden to the rescue and thrown Dubai a £6bn lifeline helped ease these concerns.
The LSE tends to be more volatile than other FTSE 100 stocks because its shares are quite tightly held. On top of the near 21% owned by Borse Dubai, the Qataris hold 15% and a number of Italian banks are sitting on 18% between them.
The Dubai effect helped Asia-focused bank Standard Chartered to rise 65.5p to 1574p. Credit Suisse upgraded its rating to outperform from neutral and hiked its price target to 2000p from 1600p having been reassured last week by the bank's comments on its exposure to Dubai.
Investment manager Ashmore, which is thought to be a bond holder in Dubai Holdings, the personal investment vehicle of ruler Sheik Mohammed bin Rashid al-Maktoum, rallied 18.4p to 273.7p.
Elsewhere fund manager Gartmore made a disappointing debut despite having slashed its offer price on Friday in an attempt to push up demand for its stock.
Shares in the group dropped below their offer price of 220p to as low as 210p at one point, before gaining some composure to close at 216.5p.
Richard Hunter, head of UK equities at Hargreaves Lansdown said: 'It is quite unusual for an IPO to come in at a discount. It looks as though they potentially didn't quite get the pricing right.'
Dealers said sentiment had not been helped by news the company is being probed by the US Securities and Exchange Commission.
To be fair the company had included the information on page 234 in its 243-page prospectus, which was published earlier this month.
The prospectus reveals the SEC is investigating short-selling by a Gartmore fund ahead of a fundraising in New York.
Gartmore said it is fully cooperating with the SEC and has been advised it could be forced to cough up £1.2m if enforcement action is taken. It has made a provision in its accounts for this.
The flotation disappointment didn't bode well for others waiting in the IPO pipeline, but investors in London shrugged such concerns aside and concentrated on the Dubai bailout. The FTSE 100 index rose 53.77 points or 1% to 5315.34.
Across the Atlantic, the Dow Jones Industrial Average had firmed 30.76 points to 10,502.26 by mid-session in the wake of a surprise mega deal. Energy giant Exxon Mobil has struck a £18.4bn agreement to buy natural gas producer XTO Energy.
The Exxon Mobil takeover deal across the pond lent support to Royal Dutch Shell's A shares, up 16p to 1832.5p and BP, 5.8p firmer at 581.2p.
London wasn't short of its own merger and acquisition activity with chocolate maker Cadbury (up 4.5p to 794.5p) confirming potential rival bid interest as it issued its defence document against Kraft's takeover bid.
Consolidation hopes sent shares in online gaming group PartyGaming soaring at the start of the session. But its mooted Austrian partner Bwin put a dampener on the festive mood saying it was not in advanced merger talks with anyone, including PartyGaming.
PartyGaming's shares closed up just 0.2p at 256.8p while fellow online gaming group 888 rose 4.1p at 112.7p.
Shanks jumped 5.2p to 135.4p amid speculation of a takeover battle for the waste management company. US power firm Covanta is rumoured to be interested in joining the fray, which kicked off last week when US private group Carlyle made a 135p-a-share approach. Shanks hopes to drum up offers of at least 150p a share.
Oil services company John Wood Group shares were 10.5p higher at 296.8p helped by Royal Bank of Scotland raising its recommendation on the stock to buy from hold.
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