LONDON (ShareCast) - London shares are mixed, with the Footsie virtually unchanged, as strong performances from banks offset losses seen on resource stocks.

HBOS, which has a £4bn rights issue at 275p closing in July, is still top of the pile, receiving a further lift from the strong response to the UBS rights issue. The Swiss lender said 99.4% of the new shares were taken up, while the rest will be sold on the open market later today.

In the morning HBOS shares had surged as short-sellers raced to close short positions ahead of new regulations on short-selling due to be introduced next week. The Financial Services Authority said today it is tightening disclosure rules for firms undertaking rights issues to clamp down on short-selling abuses.

From next Friday, 20 June, the FSA will require anyone with a short position amounting to more than 0.25% to notify the market by 3.30pm the following day.

Companies that may possibly need to tap shareholders in future, such as Alliance & Leicester and Persimmon, are also up.

Meanwhile, elsewhere in the banking sector Royal Bank of Scotland is firmer after offloading its Angel Trains rolling stock company.

Johnston Press, another rights issuer, is best of the mid-caps. The Scotsman and Yorkshire Post publisher is lifted by speculation that it will receive an offer from Malaysian investment group Usaha Tegas Sdn.

BG is up in an otherwise weak oil sector after it revealed another new oil discovery in the Santos Basin, offshore Brazil, but softer metal prices have miners deep in the red. Eurasian Natural Resources, Lonmin, Xstrata and Kazakhmys are the worst affected.

Carphone Warehouse has dialled in gains after Citigroup upgraded the mobile phone supplier to ‘hold’ from ‘sell’ to reflect the 40% slide in its share price this year.

There was massive support for distressed housebuilders this morning, and although prices are now off the top, the likes of Taylor Wimpey, Redrow, Barratt Developments, Bellwayand Bovis are all up well over 5%.

Enironmental consultant AEA is to buy Project Performance Corporation, an environmental management and information technology consulting firm headquartered in Virginia, United States, for a consideration £33m. A 4 for 5 rights at 40p will raise £39.7m to pay for the deal.

Guoco has upped its stake in Mecca Bingo owner Rank to 13.1% from 12.7%. The move by Guoco, run by Quek Leng Chan, is likely to add further fuel to speculation that the Asian firm is considering a bid for the UK group. The company, part of Malaysia’s Hong Leong Group, has been building up its holding in the UK firm since the beginning of 2008.

Menswear chain Moss Bros is to pay a special dividend of 1.3p on the 28 July 2008 even though like-for-like sales for the first 19 weeks of the year to 7 June were down by 1.5 %. "The men's retail market continues to be extremely challenging but management believes the business is well set up to navigate this difficult period," chief executive Philip Mountford said.

Altium Securities lowered its rating on Moss Bros to ‘sell’ from ‘neutral’ after the lacklustre trading update today. The tougher trading conditions experienced prompted Altium to reduce its forecasts on the chain.

Major shareholder Romac Investments is considering a possible offer for Supporta after a previous approach was rejected. Others have been interested in the outsource services provider, it said.

Recruitment firm Hydrogen Group has suffered collateral damage from the crisis in the investment banking sector, with levels of recruitment activity flat in a traditionally busy time for the sector.

Bid target Meldex has responded to a recent slide in its share price by assuring investors it is not preparing to launch a rights issue. The pharmaceutical and healthcare company says it knows of no business reason for the recent sharp fall in its share price.

Arbuthnot Securities has upped its rating on Randgold Resources to ‘buy’ from ‘neutral’ in light of the dip in the Africa-focused gold miner’s share price recently. The broker pointed to a 30% drop in Randgold’s stock since April, which came on the back of a fall in the gold price of only 8.7%.

Ukraine-based miner Ferrexpo continues to attract profit-taking ahead of its ascension to the FTSE 100, as does Aquarius Platinum after its upgrade by Investec yesterday.

Shares in ClinPhone soared after Parexel announced that its 135p cash and share offer for the clinical trial technology provider has been accepted. The offer, which represents a 31% premium to ClinPhone’s closing price of 103p on Thursday, values the group at about £91m.

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