LONDON (ShareCast) - London staged a late recovery to end the session in the blue and above 5,800 as investors piled into rights issue stocks on news that the FSA is introducing new short-selling rules.

There was also good news from Wall Street, with a bigger than expected hike in inflation unable to dent enthusiasm following gains for the dollar and a slide in oil prices.

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

The UK bank’s shares 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, also closed with strong gains, while Royal Bank of Scotland firmed after offloading its Angel Trains rolling stock company for £3.6bn.

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

BG rose 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 were the worst affected.

Carphone Warehouse 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, with Taylor Wimpey, Redrow, Barratt Developments, Bellway and Bovis posting
beefy gains.

Elsewhere, environmental 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 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 continued to attract profit-taking ahead of its ascension to the FTSE 100, as does Aquarius Platinum after its upgrade by Investec yesterday.

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.


FTSE 100 - Risers
HBOS (HBOS) 321.75p +13.69%
Alliance & Leicester (AL.) 338.75p +10.88%
Persimmon (PSN) 411.50p +10.40%
Carphone Warehouse Group (CPW) 214.75p +6.05%
Wolseley (WOS) 511.50p +5.25%
British Airways (BAY) 250.50p +4.37%
Kingfisher (KGF) 123.70p +4.04%
Royal Bank of Scotland Group (RBS) 236.25p +3.17%
Morrison (Wm) Supermarkets (MRW) 276.50p +2.98%
BT Group (BT.A) 216.50p +2.97%

FTSE 100 - Fallers
Cairn Energy (CNE) 3,283.00p -4.15%
Tullow Oil (TLW) 887.00p -3.59%
Kazakhmys (KAZ) 1,550.00p -2.94%
Eurasian Natural Resources (ENRC) 1,321.00p -2.87%
London Stock Exchange Group (LSE) 880.00p -2.44%
Lonmin (LMI) 3,051.00p -2.34%
Imperial Tobacco Group (IMT) 2,005.00p -1.76%
Xstrata (XTA) 4,160.00p -1.70%
Johnson Matthey (JMAT) 1,893.00p -1.66%
Amec (AMEC) 918.00p -1.66%

FTSE 250 - Risers
Johnston Press (JPR) 69.75p +20.26%
Findel (FDL) 188.00p +16.59%
Redrow (RDW) 163.75p +16.13%
Taylor Wimpey (TW.) 70.50p +15.57%
DSG International (DSGI) 54.00p +15.51%
Barratt Developments (BDEV) 86.50p +13.44%
Real Estate Opportunities (REO) 98.00p +13.29%
Daejan Holdings (DJAN) 2,682.00p +11.80%
Bradford & Bingley (BB.) 78.75p +8.62%
Bovis Homes Group (BVS) 377.25p +8.41%

FTSE 250 - Fallers
Northgate (NTG) 439.25p -5.64%
Aquarius Platinum (AQP) 751.50p -4.57%
Forth Ports (FPT) 1,786.00p -4.24%
International Ferro Metals (IFL) 129.00p -3.73%
Ferrexpo (FXPO) 425.25p -3.35%
PartyGaming (PRTY) 262.50p -3.05%
JKX Oil & Gas (JKX) 481.75p -2.73%
Hargreaves Lansdown (HL.) 158.50p -2.61%
Wellstream Holdings (WSM) 1,282.00p -2.51%
VT Group (VTG) 658.00p -2.37%

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