Ladbrokes has confirmed that it has ended talks with its online rival gaming company, 888, after the two companies failed to find common ground on the value of the company. The shares are up 6.96% as the city backs the decision.

The talks were officially confirmed in December with reports that Ladbrokes could be prepared to pay up to £240 million in a takeover deal.

Richard Glynn, the chief executive at Ladbrokes, added that he "simply decided it was not in the interests of shareholders".

The gaming giant also announced net revenue rose by 2.3% in the first quarter. The bookmaker added that while the economic climate was taking its toll on consumer confidence, its Global Draw machines which had been added to 75% of its outlets had been successful.

Money staked on the company’s telephone betting system increased by 11.6%. Net debt was reduced from £492m ($804m) to £443.3m as of 31 March.

"We expect the economic climate in the UK to remain challenging in 2011 with consumer confidence and disposable incomes continuing to suffer," added Mr Glynn.

"Notwithstanding this, at this early stage in the year, the business is performing in line with the board's expectations,"

Paul Leyland, an analyst from Investec Securities, supported the decision not to pursue 888: "We believe walking way from 888 was the right thing to do in terms of price, regulatory risk and operational fit,"

"However, Ladbrokes' lacklustre online performance demonstrates the scale of the job," he added.

Ladbrokes finished the day 6.97% up at 144.3p