Market report: Thursday latest
Shares in the London Stock Exchange have more than halved this year and, according to one of the City's big-hitters, a further sell-off cannot be ruled out.
Mickey Clark, Evening Standard
Stock market bears were having a field day today, selling the shares short and sending the price tumbling a further 113½p to 838½p - within a whisker of its year's low - and paring back almost all of yesterday's strong gains.
It came after the LSE announced plans to link up with New York broking house Lehman Brothers to create a Europe-wide trading platform.
The shares started the year at 1979p, but have fallen sharply since, reflecting the stock market slump and growing competition now that five takeover attempts have come to nothing.
Merrill Lynch has cut its target for LSE shares from 920p to 880p with an underperform rating.
Merrill says: 'Despite a solid growth outlook and robust profitability prospects, we think investor sentiment is likely to remain negative as the competitive headwinds intensify and equity-market volumes slow.'
The stock market slump is also bad news for Thomson Reuters, down 80p at 1359p. Morgan Stanley has repeated its underweight rating and slashed its target from 1420p to 1280p. The group supplies computer systems for traders in the City and the downturn means fewer of them will be needed.
Shares generally fell sharply with those investors daring to venture out faced with a barrage of bearish news on the economy. Bank of England Governor Mervyn King had little to cheer about as he gave evidence to MPs on inflation at the House of Commons select committee on inflation.
The FTSE 100 index dropped through the 5600 level with a loss of 147.9 to 5518.2. This afternoon sentiment was undermined by big falls on Wall Street where the Dow fell 155 points to 11,656.8.
Barclays gave back yesterday's gains, which had greeted news of its £4.5bn refunding programme. The shares fell 18.6p to 303¾p. Other banks gave up ground, including Lloyds TSB, 21¾p lower at 306¾p and Alliance & Leicester, 21¼p at 302p.
ITV fell 3.9p to a record low of 48½p. Deutsche Bank has cut its target from 55p to 48p. Satellite group Inmarsat rose 14p to 500p. Speculators, led by the hedge funds, are braced for a bid of up to 600p a share. Inmarsat shares are tightly held which means it suffers from volatility.
Harbinger, the hedge fund which is currently shorting HBOS to the tune of £350m, owns 129m shares, or 28% of the company, while Lansdowne Partners speaks for a further 50.95m, or 11%.
Lansdowne has a good track record with its name often cropping up on the shareholder register of companies that later become bid targets. Manchester United was one, and others where it hit the jackpot included Baggeridge Brick and Belhaven Brewery.
Regent Inns has become the latest casualty of the credit crunch. Its shares drifted 2.62p to 3.88p following the breakdown of bid talks after potential buyers found it difficult to raise financing.
Dresdner Kleinwort has cut Regent from hold to sell. It has a target of 2.5p and fears the shares may become worthless. KBC is talking of between 4.5p and 5p and regards and economically regards even this as questionable.
Matra Petroleum shaded 0.88p to 4p on news that a previous 50% shareholder in a recently acquired Russian project has started legal proceedings to nullify the acquisition.
Kompania Gaz i Neft is suing Matra, claiming that the Arkhangelovskoe project was not formed in full compliance with Russian laws.
Stock market information
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TOMORROW'S AGENDA
• Friday is property day. Berkeley Holdings, the housebuilder, publishes results for what has been a very tough year. Sales and prices are falling and, while City analysts expect Berkeley profits to increase from £188m to £201m, they will be more interested in how business was over the spring and its expectations for summer - as well as what, if anything, it plans to build this year. Berkeley's shares have more than halved in the past 12 months.
• If you want to be depressed about house prices, or if you're hoping for a crash so that you can trade up or get on to the property ladder, tomorrow's figures from the Land Registry should be right up your street. They are the least forward-looking of all the various house-price surveys but they will give the most accurate view of the big slowdown in volumes, and of the slump in property prices.
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