Leading shares have made a buoyant start after encouraging news from last night's Federal Reserve minutes and a positive update from technology group Intel.
There was yet another bit of bid speculation too, with renewed talk of publisher Reed Elsevier being in the sights of a predator, possibly rival Wolters Kluwer or a private equity business. Reed has risen 11.5p to 561p.
With signs that the US Fed is edging closer towards more quantitative easing to pump more money into its economy, the FTSE 100 has added 67.10 points to 5728.69.
Intel's better than expected third quarter figures have given a lift to technology stocks, with Arm up 11.3p to 387p and Imagination Technologies up 14.2p at 426.2p.
But Standard Chartered, buoyed yesterday by bid talk, has lost 56p to 1852.5p after its £3.3bn rights issue to shore up its finances ahead of the new Basel 111 capital rules. The move had analysts trying to pick the next candidates for cash calls. Andrew Lim and Kapilan Pillai at Matrix said:
Standard Chartered is the second European Bank to announce a capital increase after Deutsche Bank's €10.2bn raise last month. What we believe is a game changer though is that this is the first bank to raise money for regulatory purposes where we did not previously think there was a pressing requirement to do so. Standard Chartered, by our analysis, would have been perfectly capable of meeting the minimum required Common Equity Tier 1 ratio of 7.0% using retained earnings alone. Furthermore, we believe the bank would not have been judged as systemically important as other, much larger banks.
The move by Standard Chartered therefore marks the beginning of the race to improve ratios ahead of schedule, similar to what happened in the US after the bank stress tests. We believe this move will put other, larger banks under pressure to raise capital, which we feel will limit upside in the banks sector in the near term, particularly for those banks which we feel are relatively weak in our coverage universe (BBVA, Unicredit, Intesa, Santander) also placing particular emphasis on the UK banks liable to be impacted by a "UK Finish" – i.e. Barclays, HSBC and to a lesser extent, Lloyds Banking Group (which we see as the best capitalised in the UK space).
Barclays has fallen 9.4p to 285.35p but Lloyds Banking Group is up 0.73p to 73.38p. HSBC is 2.4p higher at 665.6p.
Elsewhere luxury goods group Burberry, a strong market of late on fundamentals and bid talk, has lost 40p to 999p on a mixture of profit taking after its first half update, and some slight disappointment about its full year guidance.
