Morning Market, Monday 25th February 2008

The FTSE was up about 102 points at 5,991 by 9am, which was an acceptable start to the week. The FTSE 250 was up about 107 points at 10,158.0.

Over the pond on Friday there was a late rally due to news that a bailout plan for troubled bond insurer Ambac Financial would be confirmed this week. The DJI closed up 96.72 at 12,381.02, despite being some 225 points lower than that during the day. The S&P500 closed up 10.58 points at 1,353.11 and the Nasdaq up 3.57 points at 2,303.35.

In the Far East this morning the Japan Nikkei 225 closed uo 414.11 points at 13,914.57, whilst in Hong Kong the Hang Seng actually closed down 35.90 points at 23,269.14.

Back here in the UK we saw the banks strengthening the FTSE, and some positive mergert news over the weelkend in the paperes also giving some positive feeling. It appears that Lloyds TSB is on the acquisition trail, and Alliance and Leicester and 2nd tier player Bradford & Bingley look like possible targets. Lloyds TSB, which announced decent full-year profits of £3.9 bln on Friday, said that it was ‘early days’ on any possible action, and that the bank’s board had not discussed anything at meeting as yet. Added to the Lloyds TSB news was the rumour that the Qatari government could be contemplating a fair-siized investment in RBS said the same newspaper. The QIA has not bought RBS shares as yet, and no contact has been made as yet, but sources confirmed a stake may be bought.

With all this we saw RBS up 21p at 399, Alliance & Leicester up 25p to 535, HBOS up 22p at 668, Lloyds TSB up 12p at 470p and Bradford & Bingley up 10p at 199.

Insurer Friends Provident was up 3p at 135p as other media reported that US private equity firm JC Flowers is in talks with a number of banks about financing a bid.

The housebuilders gained from recent pressure, with Persimmons up 21p at 737 ahead of its expected £590m profit announcement this week. Peer Barratts was up 5.5p at 405p, whilst Redrow was up 4p at 282.5p ahead of its results, due on Thursday. On Friday RightMove will give us the latest on the hosuing market for the UK.

Commercial property group Hammerson was up 55p this morning, at 1,114 after it announced some good figures, with a 3% increase in full-year NAV to £15.45 per share.

Resolution wasn’t having such a good morning, down 18p at 645 after weekend press said the company’s sale to Pearl Group has been put back again for the 3rd time in 5 weeks, sparking uncertainties the £5 bln cash deal will go through.

Associated British Foods fell 12p early doors to 864.5 after a trading update this morning, despite it being quite reassuring. Looks like profit taking. Broker Credit Suisse raised its target to 850p, up from 800p.