Royal Mail was valued at around £4 billion as shares changed hands in unofficial trading ahead of its flotation.
Alastair McCaig, market analyst at IG, said demand from clients meant the anticipated price was 400p, well ahead of the UK government’s expected 260p to £330p price range.
“The last time that expectation of a company floating was this high was just before Facebook started trading,” he said.
The wider market continued to struggle amid the political deadlock in the US, although the FTSE 100 Index clawed back some of its losses to close 16.6 points lower at 6,437.28.
Marks & Spencer was one of the biggest fallers in the top flight after Credit Suisse scaled back its full-year forecasts on the basis that the second quarter of the financial year has been slower than expected in clothing. M&S shares, which have enjoyed a strong run in recent weeks, fell back nearly 3 per cent or 13.7p to 480.3p.
Other stocks from the retail sector were also under pressure, with Next down 60p at 5,030p and Sports Direct 30.5p cheaper at 674.5p.
Luxury retailer Burberry was also lower after boss Angela Ahrendts was quoted as saying that the recent slowdown in China may last longer than expected. Its shares slipped 20p to 1,608p.
Among the risers, engines giant Rolls-Royce gained after it announced an order from Japan Airlines to buy 31 Airbus A350 aircraft which are powered by its Trent engines. Rolls shares rose 4p to 1,119p as the order represented a shift in Japanese aviation as carriers have traditionally favoured Airbus rival Boeing.
Miner Fresnillo was also in the black after being upgraded to “buy” by UBS. It topped the risers’ board with a 2 per cent gain, to 931.5p.