Shares in Google surged by 15 per cent to $98 as trading in the internet search engine group began on the technology-based Nasdaq index in New York.

An increase had been widely anticipated after Google, prompted by mediocre demand for the stock from institutional investors, reduced its initial offering price to $85

Google had originally hoped the stock would launch at between $108 and $135 a share.

Hilary Cook, of Barclays stockbrokers, said: "[Google] realised there was not the appetite for the shares."

With fewer shares on offer that had originally been planned, the flotation has raised only $1.67 billion, half the sum which Google had hoped for.

A share price of $98 values the company at $26 billion (£14.3 billion), more than that of Amazon, the dot.com retailer, but less than that of General Motors. Google had originally sought a stock market value of near the $38.3 billion earned by Yahoo!

The company, which unveiled its IPO four months ago, chose to launch through a Dutch auction, which gave individual investors a better chance of winning shares, and limited Wall Street fees, but distanced many institutional investors.

The IPO has faced a number mishaps, including a failure to register 23 million shares and 5.6 million share options granted to staff and consultants, apparently in breach of US stock market rules.

A Playboy interview with Sergey Brin and Larry Page Google's founders, published last week also raised concerns that the company had courted the media to hype its stock.

Then the flotation was delayed for a day after the Securities and Exchange Commission failed to clear paperwork.

The SEC, which cleared the flotation last night, is continuing an informal inquiry into Google's offer to buy back the shares and options it may have issued illegally.

IG Index, the spread betting firm, expects Google's share price to close at between $86 and $91.

• By 6pm BST shares in Google were trading up $18 at $103.

  Google fact sheet

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