Morning:
6°c
Market report: afternoon update
A big seller sent shares of Lloyds TSB tumbling 14p to 181.2p as more than nine million shares changed hands.
The seller was said to have attempted to dump a large parcel of shares on the recently introduced Chi-X trading platform, as opposed to the recognised London stock market. Such was the speed of the markdown that traders were caught on the hop.
Word is hedge funds have been short of Lloyds and HBOS, down 7.2 at 100.5p, as they straddled both stocks. They have now begun unravelling those positions, which means they have been dumping Lloyds stock.
The sale of shares coincided with another report that Lloyds proposed £7 billion takeover of HBOS, which has been arranged by the Government, may have run into further opposition. Word is the Bank of China may link with former HBOS chief executive Jim Spowart and investment company European American Capital over a possible counterbid to the offer from Lloyds TSB.
Over the weekend, HBOS rejected an approach by former bankers Sir Peter Burt and Sir George Mathewson to take over the running of the mortgage lender. They argued the takeover by Lloyds was unfair to HBOS shareholders. Other banks also came out in sympathy with Lloyds and HBOS. HSBC fell 53½p to 682p, Barclays 6.6p to 178.4p and Royal Bank of Scotland 1.5p to 59.5p.
Shares generally slammed into reverse following the change of fortunes on Wall Street overnight, where the Dow lost an early lead of more than 130 points.
In an other day of exceptionally thin trading, the FTSE 100 index fell 124 points to 4279.8.0. By lunchtime total stock market turnover was just 1.1 billion shares. Trading on Wall Street this afternoon was expected to be subdued as investors marked Veteran's Day.
Imperial Energy stood out among second-liners with a rise of 126p to 1126p. India's ONGC says it has met all the conditions required to complete its $2.6 billion (£1.67 billion) takeover of Imperial, worth 1250p a share. Some speculators feared the deal would be scuppered by a falling oil price.
Morgan Stanley has slashed its target for Man Group, the UK's largest hedge-fund operator, from 455p to 260p in the wake of last week's disappointing drop in profits. It reckons the move to reduce debt on the remaining $19 billion of structured capital guaranteed product portfolio could drive assets under management to $37 billion.
Man, down 15p at 265¾p, is also vulnerable, along with the rest of the hedge fund industry, to increased redemptions by clients as the stock market continues to falter.
News of stakebuilding lifted UTV Media 14¼p to 96¼p. Irish venture- capital outfit TVC Holdings has paid £2.2 million for a further 3% of the shares, raising its total holding 18%.
At the same time, Organo Investments has bought a further 2.8 million shares in the Ulster TV broadcaster, lifting its holding to 9.54%. Back in July, TVC raised its stake to 15% and Organo to 6.57%. But the UTV share price was then trading at around the 135p level — way down from the 321p it started the year at.
Not all retailers are finding the going that difficult in the run-up to the important Christmas trading season. Automotive parts supplier Halfords, ¼p lighter at 259p, is regarded as a relatively safe way to play a sector recovery, due to its diverse and low product mix and potential for new store openings.
UBS has raised its rating on the shares from neutral to buy with a 297p target.It reckons Halfords' share price should trade at a 10% premium to the sector. The drop in new car sales is good for the group, because it means drivers are making their existing cars last longer, and these therefore need more maintenance.
Premier Foods was a nervous market, losing 1½p to 33p, ahead of the second-half trading update.
Citigroup has slashed its target price from 130p to 45p and says the Hovis and Bisto food group will have to clarify the outlook for commodities, as well the current state of play on talks with its bankers over its debt mountain.
