By Tommy Wilkes
LONDON (Reuters) - The London Stock Exchange <LSE.L> reported a 55 percent fall in equity capital raised in 11 months to end-Feb as a third-quarter share price rally and a pick-up in traded volumes failed to offset last year's slowdown.
Total equity capital raised fell to 14.8 billion pounds for the period, down from 32.4 billion pounds a year earlier, the LSE said in a trading update on Thursday. New listings were down to 107 from 144 last year.
The falls came despite a rise in activity since the third quarter; the London market for initial public offerings continues to recover with companies tapping into growing investor confidence and rising stock market valuations.
The LSE said there were 12 new issues in March in the UK and pointed to "an encouraging pipeline" for the new financial year starting in April. Last year the euro zone debt crisis and jitters about the U.S. economic recovery led many companies to put off plans to go public.
The FTSE 100 is up 12 percent over the past year, and fears that a potential run on Cyprus's banks might damage fragile investor confidence across the euro zone have not hit London shares hard over the past weeks.
The rise comes after a gloomy period last year when nervous investors shifted out of equities and into the perceived safety of bonds.
The LSE said the average trading volume was down over the 11 months compared with a year earlier.
The average daily UK equity value traded was 15 percent lower, while at LSE's Italian exchange, Borsa Italiana, volumes were 14 percent down. The volume of derivatives traded on its Turquoise platform and the Italian Derivatives Exchange Market (IDEM) fell 30 percent.
FIXED INCOME FARES BETTER
Fixed-income trading volumes were higher in the 11-month period. The volume on the LSE's electronic fixed income market MTS was up 17 percent, while the volume on its retail bond market MOT rose 19 percent.
The numbers confirmed analysts' expectations that the LSE, whose shares are also traded on the exchange, would announce weaker full-year results on May 15.
"Cash equities, while down, were a little ahead of our forecasts, which was offset by admissions being a little weaker than expected, despite quite a significant recent improvement," said Numis analyst James Hamilton.
Shares in LSE were 0.7 percent lower at 1317 pence at 11.17 a.m. British Time, against a 0.6 percent rise in the FTSE 100.
The LSE also said it now had a clear path to complete its acquisition of up to 55.5 percent of shares in LCH.Clearnet, taking its total stake in the London clearing house to a maximum of 57.8 percent.
LSE shareholders approved the deal on Wednesday and the Financial Services Authority had sent a letter of "non-objection", LSE said.
Under the deal the LSE will pay 328 million euros (277 million pounds) in cash to beef up its lucrative clearing and risk management business. It will also contribute 185 million euros to LCH.Clearnet's planned 320 million euro capital raising.
(Editing by David Goodman and Clelia Oziel)