BUZZ-Provident Financial: Shares spike 75 pct as rights issue smaller than feared

** Shares (Berlin: DI6.BE - news) of troubled Provident Financial (Other OTC: FPLPF - news) up 75 pct, biggest boost to FTSE midcap index

** Three traders say a smaller-than-expected rights issue has set off a short-squeeze as hedge funds attempt to cover their positions

** Provident Financial had mooted a rights issue as large as £500 mln, but instead announced a fully-covered £331 mln issue

** Stock is the most shorted of any UK company, with 13.9 pct significant short positions

** PFG reaches settlement with the Financial Conduct Authority (FCA) for its probe into the sale of Vanquis Bank's repayment option plan, takes provision of £172.1 mln

** 2017 adjusted pre-tax profit fell by 67 pct to £109.1 mln, against Peel Hunt forecast of £105.5 mln, Liberum forecast of £107.7 mln

** Liberum analysts say "encouraging that a line has now been drawn" under the FCA's investigation

** Analysts at Peel Hunt says rights issue "ensures the balance sheet is robust and sufficient to allow the group to focus on the future" adding that today's statements are "somewhat of an inflection point" for PFG

** PFG looks to restore dividends with a nominal dividend for the 2018 financial year, before adopting a progressive dividend, from the 2019 financial year ($1 = 0.7154 pounds) (RM (LSE: RM.L - news) : justin.varghese.thomsonreuters.com@reuters.net; alasdair.pal.thomsonreuters.com@reuters.net)