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Reuters considering sale of Instinet stake

Global news and information provider Reuters Group PLC said Tuesday it is considering selling its majority stake in stock-trading network Instinet Group Inc. Its shares rose more than 1 percent.

In a statement to the London Stock Exchange, Reuters said it was looking at ways of extracting value from the company.

“Strategic alternatives are being considered by Reuters and Instinet, including a possible sale, merger or other business combination or corporate transaction,” the company said. “However, neither Reuters nor Instinet has determined to pursue any specific transaction.”

New York-based Instinet, which is 67 percent owned by Reuters, has been the focus of media speculation for several months.

Shares in Reuters had risen nearly 4 percent Thursday after media reports said that Instinet had retained UBS for an auction and Reuters announced its own plans to enter electronic trading in the fixed income and equities markets, with foreign exchange to follow.

The shares gained another 2 percent Friday after Reuters spokesman Johnny Weir said the company was not in formal talks to sell off its stake in Instinet.

Shares gained another 1.15 percent to 396 pence ($7.36) in trading Tuesday on the London Stock Exchange.

Analysts suggest the sale of Instinet would improve Reuters’ cash position, leading to the possibility of share buybacks or a cash return, and would allow the company to focus on its core businesses.

Reuters is more than halfway through a restructuring plan, which aims to generate 440 million pounds ($817 million) of cost savings by the end of 2006.