LSE beats forecast but market still tough

By Daisy Ku

LONDON (Reuters) - The London Stock Exchange Group said weak trading cut first-quarter revenues by 8 percent, beating forecasts but highlighting the challenge facing new Chief Executive Xavier Rolet, who plans cost cuts and new tariffs.

The group, which also run the Milan bourse, made revenues of 161.9 million pounds in the three months to end-June, versus 176.3 million pounds a year ago.

Shares in LSE rose on the results, which were better than an average forecast of four analysts of 151.4 million pounds, adding 2.3 percent by 0707 GMT (8:07 a.m. British time) to 667-1/2 pence a share.

"While market conditions are likely to remain challenging in the near term, the Group is taking actions to ensure we are in good shape and responding fast to changing markets," said Rolet.

"A new, leaner organisation structure is taking effect, new trading tariffs for UK cash equities trading have been announced, and work continues to ensure the Group is well placed to capture market opportunities," he added.

In the UK, LSE saw a 43 percent plunge in year-on-year average daily value traded in June, following a 37 percent decline in May and a 36 percent drop in April.

Analysts expect the cash trading business to remain weak as the stock market enters a quiet summer.

The LSE has responded by announcing a new tariff structure effective September to encourage trading as its market share fell to 70 percent in June from 80 percent at the start of the year.