LSE System Glitch; Stocks Rise

123jump.com Staff
08 Sep, 2008
New York City

Stocks in UK closed higher as the U.S. bailout of Fannie and Freddie bolstered positive sentiment. The ongoing decline in housing market is likely to go on, till the inventories of unsold homes decline. The move, widely expected over the weekend lifted markets in Asia and in Europe, led by a surge in trading volume in Credit Suisse, UBS, HSBS and Royal Bank of Scotland. London Stock Exchange trading platform could accept orders for most of the trading session today.

[R]1:00PM New York, 6:00PM London- U.K. producer prices decline 0.6% in August. LSE hit by a technical system glitch.[/R]

London market averages rose spurred by financial stocks after the U.S. Treasury took over Freddie Mac and Fannie Mae.

Market Sentiment

In London trading FTSE 100 increased 3.92% or 205.6 to 2, 126.52. Of the 102 FTSE 100 stocks 100 rose, and 2 declined. Schroders Plc led advancers in the index shares with a rise of 12.56%.

Producer Prices Falls 0.6%

The Office of National Statistics reported that the U.K. producer prices fell 0.6% in August from the previous month as energy and raw material costs slipped on slowing demand. Economists had earlier predicted an increase of 0.1%.

In particular, raw material costs slid 2% from the previous month and prices still soared 26% from a year ago.

System Glitch Hits LSE

London Stock Exchange suffered its worst technical fault in the last eight years after several clients failed to enter orders. The lack of connectivity to the exchange systems was first experienced around 8:20AM GMT and first reported on the LSE Web site at 9:07AM GMT.

The exchange failed to restart its continuous trading for the day but managed to get its auction process working. The international order book and international bulletin board was not available for automatic execution for the day.

Also the ICE electronic commodities exchange, which offers futures and contracts for commodities such as crude oil, natural gas and electricity, was plagued by a glitch and announced that it had closed its futures and over-the-counter markets.

The LSE is facing rising competition from new trading platforms such as Turquoise, Japanese investment bank Nomura Holding Inc.''s Chi-X, Nasdaq OMX Inc.''s European platform and several other upstarts in the region. The new companies are offering nearly 70% to 90% discount to the market participants with better technologies and wider variety of order books.

Chi-X, has secured nearly 20% market share in the most active stocks in the FTSE 100 index. Peter Randall said that Chi-X provides market data for free to nearly 80 participants and other organization. He also mentioned that, “We have the capacity and technology to handle any surge in most active stocks in Europe.”

Gainers & Losers

Schroders Plc led advancers in the FTSE 100 index shares with a rise of 12.56% followed by increases in Barclays of 11.90%, in HBOS Plc of 11.43%, and Royal Bank of Scotland of 11.26%.

Financial stocks rose as the U.S. Treasury seized control of the Freddie Mac and Fannie Mae strengthened market sentiment. Standard Chartered rose 9.32% and Old Mutual advanced 6.07%.

Retailers also rose as well. Sainsbury edged up 7.96% and Kingfisher increased 7.70%.

GlaxoSmithKline led decliners in the FTSE 100 index shares with a fall of 1.61% followed by losses in Unilever of 0.69%.

Nationwide to Merge With Derbyshire and Cheshire Building Societies

Nationwide Building Society reported on its Web site today that it will merge with The Derbyshire Building Society and The Cheshire Building Society, who will transfer into the Nationwide Group by way of two separate transactions.

The merger will create a society with assets totaling more than £191 billion and £122 billion of retail deposits.

Europe Markets Review

In London FTSE 100 Index closed higher 205.60 or 3.92% to 5,446.30, in Paris CAC 40 Index increased 143.52 or 3.42% to close at 4,340.18 and in Frankfurt DAX index higher 136.30 or 2.22% to close at 6,263.74. In Zurich trading SMI increased 200.83 or 2.88% to close at 7,177.42.