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FTSE 100 recovers with HBOS leading rebound

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by Kay Mitchell
”FTSE

Shares in HBOS and other banks across Europe increased yesterday, recovering from last week’s slump after news that JP Morgan Chase’s improved offer for Bear Stearns went some way to lessen the gloom currently surrounding the financial sector.

Furthermore, news that HBOS’ management purchased £6 million worth of shares in the bank resulted in a 17% gain in the bank.

The rise was the biggest one-day gain since the UK’s biggest mortgage lender listed in 2001 as traders saw the move as a vote of confidence in the bank.

Last week, HBOS saw it shares dive after suspicious trading and rumours that the bank was in crisis. HBOS denied the rumours, calling them ill-founded and malicious.

Royal Bank of Scotland closed up 9.3%, Barclays rose 7% and Lloyds TSB increased 6.3%. HBOS ended up 15% at 544.50 pence.

Stock markets opened in the UK yesterday after the 4-day Easter holiday, while US stock markets opened on Monday.

In the US on Monday, a new deal for Bear Stearns was offered by JP Morgan Chase. Under the new terms, JP Morgan Chase increased its offer to $10 (£5) a share, from the original offer of $2 a share. It was hoped that the revised offer might calm shareholders who were believed to be infuriated by the original offer.

The near collapse of Bear Stearns caused panic in stock markets worldwide as investors considered which other banks may be next to fall.

The FTSE 100 ended up 193.9 points at 5,689.1 at close of trading yesterday.

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News posted: March 26, 2008

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