UK telephone directory company Yell has set a lower than expected flotation price for its shares.

The company said on Friday that it planned to offer its shares at 270-345 pence each at flotation next month, valuing the company at �1.8-2.3bn.

Analysts had estimated the firm's value at �2.3-2.8bn.

Observers said the lower price tag reflected investor wariness of new share issues at a time when the UK's benchmark FTSE 100 index is languishing at an eight-month low.

In the pipeline

Last month, shares in books and music retailer HMV slumped below their initial offer price shortly after it was floated.

Pub chain Punch Taverns later said it was scrapping its flotation plans because of the depressed market, before changing its mind and going ahead with the offering.

Other companies planning to launch initial public offerings this summer include fashion retailer Burberry and betting shop chain William Hill.

Expansion plans

Yell fetched a price of �2.1bn last year when it was sold by its debt-ridden former owner BT to venture capital groups Apax and Hicks Muse Tate & Trust.

The company hopes to raise about �750m from its stock market launch.

It is thought likely to use the money to fund continued expansion in the US.