UPDATE 2-New issues business lifts London Stock Exchange income by 48 pct

Thu Jan 23, 2014 8:07am EST

* Q3 income rises 48 pct to 308.9 mln stg

* Figure includes 6.9 mln gain on non-core asset sale

* Capital markets revenue up 21 percent

* Post-trade unit revenue up 14 pct excluding LCH.Clearnet

* Shares up 1.2 pct at 1876 pence by 1300 GMT

By Clare Hutchison

LONDON, Jan 23 (Reuters) - The London Stock Exchange (LSE) posted a 48 percent rise in third-quarter income on Thursday, thanks to a near doubling of equity and debt issuance and a improved performance in its core securities-trading business.

The bumper results were further proof that Chief Executive Xavier Rolet's strategy to diversify and move into strong potential growth areas had paid off, analysts said.

Income for the three months through December rose to 308.9 million pounds ($512.3 million) from 208.9 million the previous year. The figure includes a 6.9 million pound gain from the sale of shares in a non-core asset.

Revenue across all the exchange's business divisions - capital markets, post trade, information services and technology - was higher, with a 21-percent gain in capital markets a particular bright spot.

The company said it expected this division to benefit from further capital raising in the fourth quarter. Trading in both UK and Italian cash equities and Italian derivatives was ahead of the same period last year, it said.

Shares in the company - up more than 40 percent since June on the back of Rolet's strategy and a busier market for new issues - rose 1.2 percent to 1,876 pence by 1300 GMT, versus a 0.2 percent drop in the FTSE 100 index.

"We think the group has done well in diversifying its base of assets, improving its strategic position," Numis analysts wrote in a note to clients.

As part of that strategy the bourse acquired a majority stake in clearing house LCH.Clearnet last year.

Analysts pinpointed LCH.Clearnet's third quarter revenues of 61.2 million pounds as the only weak spot. Underperformance at SwapClear, its clearing business for interest-rate swaps traded over-the-counter, came from more clients hitting the fee threshold beyond which clearing is free, they said.

"Volumes reset at January and so we are optimistic with greater clearing members that growth resumes in 2014," Barclays' analyst Daniel Garrod said.

In a statement CEO Rolet said: "Significant focus remains on the integration of LCH.Clearnet, with a number of detailed programmes underway to achieve the widespread benefits of the transaction."

The LSE said in November it would receive about double the expected profits from LCH.Clearnet's SwapClear under a revised profit-sharing agreement and suggested there were more cost efficiencies and synergies to be gained from the acquisition.

The bourse's post-trade division excluding LCH.Clearnet saw revenue increase by 14 percent. Revenue from its technology and information services divisions rose 17 percent and 16 percent, respectively.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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