ICAP is a 'recovery to buy into', according to analysts at Prime Markets, who said that the interdealer broker's shares are responding to the strong Christmas and New Year rally.

The company said on Monday morning that it had sold its 12% stake in Traiana, which provides global banks, dealers, buy side firms and trading platforms with services to automate post-trade processing and risk management of financial transactions in listed and over-the-counter trading markets.

Prime Markets' head of dealing, Richard Curr, noted that in ICAP's half-year results report in November, Chief Executive Officer Michael Spencer said that it had been one of the toughest periods in his 36-year career in the wholesale financial markets, as trading volumes dropped across nearly all asset classes and geographies.

"As an interdealer broker and provider of post trade risk and information services, ICAP's fortunes are entirely dependent on market confidence, and just as last year saw trading volumes fall to record lows, the recovery in the run up to Christmas and the strong start to the new year would indicate an improvement is on the cards," Curr said.

"Even so ICAP have continued to cut costs, with the 12% stake sale announced today bringing more cash onto the balance sheet. Certainly the charting picture shows a steady turnaround in place since November, and now with triple major support in place, Prime Markets believes ICAP offers a recovery story to buy into."

Curr said that the shares are now trading above the 20-, 50- and 100-day moving averages at 311p, 305p and 317p, respectively. He said that the stock should test the 200-day moving average of 331p within the next two weeks before moving higher to test the late-September high of 345p.

Shares had gained 1.0% to 323.7p by 11:00 on Monday.

BC

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