London shares up early on; Shire jumps, financials gain; FOMC in focus

At 8.56 am, the FTSE 100 index was up 82.1 points at 5,496.5, having closed down 217.3 points yesterday, while the FTSE 250 index took on 88.1 at 9,568.8. Early volume was fair, with 226.8 mln shares changing hands in 75,050 deals.

Overnight Wall Street ended a temperamental session widely mixed after investors grappled with JP Morgan Chase & Co's government-backed buyout of the stricken investment bank Bear Stearns Cos. The Dow Jones industrials recovered from an initial drop of nearly 200 points to finish up 21.20 points at 11,972.30. The broader Standard & Poor's 500 was down 11.55 at 1,276.60 and Nasdaq composite indices 35.48 lower at 2,177.01, as investors bailed out of investment banks and small-cap stocks and fled to large companies which are more reliable during a weak economy.

But Asian markets ended mostly higher this morning after a mixed session amid ongoing investor caution ahead of the FOMC meeting later today. Hong Kong's Hang Seng index closed 300 points ahead at 21,384.61, reversing earlier losses, while Japan's Nikkei closed up 176.65 at 11,964.16.

In London, financials led the gainers as investors picked up bargains following the sector's substantial losses yesterday. ICAP gained 22-1/2 at 529, Man Group added 21 at 507, Old Mutual took on 2.4 pence at 104.2, and among banks HSBC rose 20 at 766, Barclays took on 8-1/2 at 401 and Lloyds TSB was up 8-1/4 at 406.

And the oil & gas sector also fuelled index gains after oil prices hit yet another record high of almost 112 usd in Asian trading. New York's main contract, light sweet crude for April delivery, hovered around 106 usd a barrel this morning, while BP traded 9 pence higher at 519, Royal Dutch Shell was up 30 at 1,676 and Cairn Energy gained 40 at 2,806.

But the top blue-chip performer was Shire, 78 pence ahead at 1,076 -- a gain of 7.8 pct, extending recent speculative gains after UBS this morning issued a note saying Anglo-Swedish pharmaceutical giant AstraZeneca could afford to pay up to 1,425 pence per share for UK peer Shire and still create value.

The broker has a 'buy' rating on Shire with a target of 1,400 pence. Among those reporting results today, TUI Travel rose 7-1/4 to 250-1/2 following an encouraging set of first-quarter results.