LSE knocked by flotations famine

CHRIS Gibson-Smith got off to a sombre start as chairman of the London Stock Exchange today after the company warned that market conditions continue to be 'difficult'.

A drop in terminal numbers and lack of floats meant turnover edged up only 0.3% to £58.7m in the three months to June. That was despite one of the most buoyant quarters for share prices in recent times. The FTSE 100 index bounced 11%, in part due to relief over the end of the Iraq war.

The LSE put out the trading statement ahead of its annual meeting, at which BP veteran Gibson-Smith takes over from Don Cruickshank. Sales from issuer services dropped 5% to £9.4m as the amount of floats fell to 40 from 71 a year earlier. The number of listed UK companies has fallen by 164 to 2724.

Turnover from broker services rose 1% to £21m and information services sales grew 4% to £25.6m. The number of terminals receiving real-time LSE information fell by 11,000 to 92,000.

Chief executive Clara Furse said: 'The current year is proving challenging but broadly in line with our expectations.' There were, however, some small green shoots of a recovery, with the number of trades over the quarter rising 8% from a year earlier to 13.4m, a daily average of 222,000. Daily volume on the Sets settlement system were up 48% to an average of 126,000.

Analysts have warned, however, that earnings could still dip this year even if the recovery in tradingcontinues. The Exchange's move to a new corporate headquarters will limit room for cost-cutting. LSE shares today lost 11 1/2p to 340p. They hit a 12-month low of 275p in March.