US shares soar as London remains suspended

US shares rose sharply today as trading began in New York following last night's £110 billion bailout of Fannie Mae and Freddie Mac, while London dealers waited for the London Stock Exchange (LSE) to reopen for business.

The Dow Jones industrial average rose 288.4 points to 11,509 as the market opened, after the US Government pledged to prop up Fannie Mae and Freddie Mac, the loss-making mortgage lenders which together control £3 trillion of the US home loan market.

Despite the rise in the Dow Jones, shares in Fannie Mae fell by 80 per cent to $1.30 while Freddie Mac's stock fell by 75 per cent to $1.25.

Shares in London are still frozen nearly six hours after trading was suspended due to a "connectivity issue", and the LSE admitted that establishing customer connectivity was taking "longer than expected".

More than double the normal number of shares were traded in London this morning as details emerged of the US rescue deal, sending the FTSE 100 index of leading shares up 4 per cent, or 199.5 points, to 5,440.2.

Today's suspension is the worst since April 5, 2000 — the last day of the tax year — when trading on the London Stock Exchange was delayed for eight hours, with dealing beginning only in mid-afternoon.

The LSE suspended connection to the exchange before 9am today after some customers experienced problems.

The operator admitted it was unsure when trading will restart today, while the cause of the problem is not yet known.

One City insider said that traders will lose "millions and millions and millions" of commission on deals, adding that today's closedown is "very serious and disastrous".

It appears there is a fault with the SETS electronic trading platform since the Johannesburg Stock Exchange also suspended trading.

One London trader criticised the lack of information from the LSE, stating: "We don’t know how major the implications will be. We haven’t lost money but we’ve lost potential revenue. Brokers aren’t getting commission for trades.”

The LSE said it re-established connection at 11.45am, although it refused to give an estimate on when shares would begin trading.

Source: Telegraph.co.uk