GLOBAL stock markets may be rising but some traders are still finding the going tough.
Overnight in the US, Instinet, the separately-quoted electronic trading arm of Reuters, said it would shed a further 185 jobs, or 15% of its workforce, as part of a plan to reduce annual operating costs by $30 million (16 million) this year.
Redundancy costs will result in a $60 million charge in the accounts during the fourth quarter and are in addition to a $22 million bill for writedowns.
The broker has decided on this course of action following the separation of its institutional broking arm and its Inet division.
Reuters, due to issue a trading statement next week, continues to hold around 63% of Instinet. The international news agency and financial information systems supplier has had a tough time in recent years, dogged by the collapse in world markets since the end of 1999.
It is hoped next week’s trading update will provide evidence of an improvement in revenue. Its shares touched 255p before rallying to trade 1/2p better at 2581/2p.
The wider market drifted lower with Wall Street expected to open down this afternoon following disappointing US employment numbers. In London, the FTSE 100 index fell 23.1 to 4471.1, almost exclusively attributable to a drop in oil giant and market heavyweight Shell. It fell 291/4p to 372p, which wiped almost 3 billion from its 39 billion market value, as some 175 million of its shares changed hands.
Trading was so brisk at one point that dealers’ screens were showing backwardations, whereby the offer price falls below the bid.
The company admits it has been over-reporting the level of proven oil reserves. Broker Merrill Lynch promptly downgraded Shell from buy to neutral.
Rival BP fell 71/2p to 435p following its own trading update, while BHP Billiton – which also has oil interests – lost 13p to 462p.
Turnover in Vodafone was bolstered by some big trades late last night. They included a line of 85 million (124 million) at 1463/4p and 21.65 million at 147p. Today it firmed 2p to a two-year high 1483/4p.
The City continues to back British Airways, up 41/2p to a new post-9.11 high of 2781/2p, on recovery hopes. This time it is broker UBS which has moved from neutral to buy and raised its 12-month target from 230p to 350p. Merrill Lynch has lifted it from 300p to 370p. The shares have taken off from 240p since the turn of the year.
Hedge fund operator Man Group fell 22p to 1546p despite Deutsche Bank rating it a buy and raising its target by 100p to 1850p.
Standard Chartered eased 5p to 923p and Bradford Bingley hardened 53/4p to 3103/4p.
Both banks have been upgraded from hold to buy in a review of the sector by US broker Smith Barney, which has also raised its target for Standard to 1025p and BB to 335p.
But Credit Suisse First Boston has cut Standard from neutral to underperform, while Smith Barney has downgraded Alliance Leicester from hold to sell and slashed its target from 850p to 800p. The shares softened 31/2p to 8821/2p.
AIM-listed NetBenefit stood out with a rise of 71/2p to 421/2p after a sizeable 25,000 shares went through at 45p as part of a delayed trade. Sibir Energy marked time at a peak of 191/2p. Word is Shell may take a stake. ReGen Therapeutics put on 1/2p at 3p amid whispers that US drugs giant Pfizer may back its development of a treatment for Alzheimer’s.
