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 reducing the fall to 1p at 257p.
The wider market made a soggy start despite the Dow’s strength on Wall Street yesterday in the face of further falls for the dollar. London’s FTSE 100 index fell 14.8 to 4479.4, almost exclusively attributable to a drop in oil giant and market heavyweight Shell. It fell 243/4p to 3761/2p, which wiped almost 2.5 billion from its 39 billion market value, as some 150 million of its shares changed hands.
Trading was so brisk 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 53/4p to 4363/4p following its own trading update.
Turnover in Vodafone was bolstered by some big trades going through on the ticker late last night.
They included a line of 85 million (124 million) at 1463/4p and 21.65 million at 147p. The price firmed a further 21/4p to a two- year high of 149p.
The City continues to play for high stakes in shares of British Airways, up another 21/2p at a new post-9.11 high of 2761/2p.
Brokers are now convinced the recovery at the national carrier is well under way, but they have said that before.
Broker UBS has thrown its support behind the airline, moving from neutral to buy and lifting its 12-month target from 230p to 350p.
Merrill Lynch has raised it from 300p to 370p.
The shares have taken off from 240p since the turn of the year.
Hedge fund operator Man Group fell 15p to 1553p despite Deutsche Bank rating it a buy and raising its target by 100p to 1850p.
Standard Chartered eased 41/2p to 9231/2p and Bradford Bingley hardened 51/4p to 3101/4p.
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 price 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 today softened 2p to 884p.
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.
