UK/Euro Financial Market Daily Morning Briefing 02-03-2006

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London shares higher in early deals with NY rally; Aviva jump on results

Leading shares pushed higher in early deals, extending yesterday's good gains in tandem with a solid rally overnight on Wall Street, with insurers in the vanguard of the advance following strong results from Aviva, dealers said.
  
At 9.08 am, the FTSE 100 index was 28.1 points firmer at 5,872.2, with all the broader FTSE indices also in demand.
   
Early volume was fair, with 278 mln shares changing hands in 34,617 deals.
   
Overnight on Wall Street, US stocks rallied as investors took advantage of a prior session sell-off to pick up attractively valued shares, notably in the technology sector.
   
The DJIA closed 60.10 points firmer at 11,053.50, while the Nasdaq composite index ended 33.25 points higher at 2,314.64.
   
Asian trading was mixed today, with the Nikkei 225 index closing 54.70 points lower at 15,909.76 as investors turned cautious ahead of January inflation data due out tomorrow.
   
Meanwhile the Hang Seng closed 64.36 points higher at 15,882.45 reflecting
the rebound on Wall Street.
   
In London, Aviva shares topped the FTSE 100 leaders board in early deals, up over 4 pct with a rise of 32 pence to 823 after the UK's biggest insurer delivered a better-than-expected 29 pct increase in full-year profit, helped by strong growth in general insurance.
   
Aviva said worldwide operating profit for 2005 came in at 2.904 bln stg on a European Embedded Value basis, up from 2.224 bln stg the previous year, and ahead of the 2.648 bln stg consensus analyst forecast.
   
The increase was driven in part by a surge in profits from general insurance, which rose 22 pct on the year to 1.551 bln stg.
   
Other blue chip insurers pushed higher in sympathy with the Aviva numbers, with Royal & Sun Alliance up 2-3/4 pence to 132-1/4, L&G ahead 2 pence at 132, and Prudential up 9 pence at 616.

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Elsewhere among the financials, Standard Chartered saw good support, up 43 pence to 1,512 following above-forecast full-year numbers from the Asian-oriented banking group.
   
Standard Chartered reported pretax profit for the year to Dec 31 2005 of 2.681 bln stg, up 19 pct from a restated 2.233 bln stg in the previous year, beating the consensus estimate of 2.641 bln stg.
   
The bank also said it is confident of prospects for 2006, seeing double-digit growth across the group.
   
And shares in Intercontinental Hotels also moved higher, adding a penny to 870-1/2 as better-than-expected full-year results accompanied news of a special dividend.
   
Merrill Lynch noted that the hotels group's operating profit of 269 mln stg beat its expectations of 266 mln stg, with a strong performance in the Americas and Asia Pacific offset by a slightly higher-than-expected central cost up 14 pct year on year.
   
The US broker reiterated its 'buy' recommendation, noting it had expected the announcement of a 500 mln stg special dividend, which comes in addition to the group's ongoing share buyback programme.
   
On the downside with blue chips, however, HBOS shares topped the fallers list once again, down 16 pence to 1,001-1/2 on further profit-taking after yesterday's solid full-year results.
   
Alliance & Leicester shares were lower in sympathy, down 11-1/2 pence to 1,073-1/2.
   
Elsewhere, shares in GlaxoSmithKline lost 2 pence at 1,466 after news of an explosion at one of its plants in Scotland, with 4 people reported to be injured in the blast at Irvine, North Ayrshire.
   
And Unilever shares lost 2-1/2 pence at 596 on profit-taking after good gains yesterday amid vague takeover speculation and reports of a UBS roadshow for the group.
   
Among the mid caps, shares in Vedanta Resources topped the leaders board, up
58 pence to 1,157 in consideration of yesterday's bullish note from Merrill Lynch, which set a 1,500 pence target for the stock, and on expectations the group could be promoted to the FTSE 100 index after next week's quarterly review.
   
CSR was also a gainer again, adding 55 pence at 1,038 following upgrades yesterday after recent results, with Citigroup today hiking its target price to 1,409.

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Among today's mid cap results, Hunting, up 12-3/4 pence to 360, Amlin, ahead 8-3/4 pence to 271, and Arriva, up 12 pence to 620 all benefited from well-received numbers.
   
But on the downside, cautious outlook comments accompanying full-year results weighed on a pair of mid caps.
   
William Hill shares shed 4 pence at 584-1/2 after the betting group said trading in the first eight weeks of 2006 has been mixed, with some strong weeks aided by more favourable football results and some poor weeks, particularly for horse racing, impacted by both unfavourable results and fixture cancellations.
   
The comment came as William hill reported a better-than-expected 5 pct rise in full-year profits before exceptional items to 246 mln stg.
  
Meanwhile shares in Trinity Mirror lost 3-1/2 pence at 577 after the UK's biggest newspaper publisher reported a fall in 2005 revenues and warned that there is no sign of a recovery in traditional advertising markets.
   
The group said like-for-like turnover for the 52 weeks to Jan 1 dipped 1.3 pct to 1.112 bln stg after a slowdown in the UK economy sparked a fall in marketing spending, particularly on display and recruitment ads.
   
But Trinity Mirror saw its pretax profits rise 5.9 pct to 220.9 mln stg over the period -- well above the 212-217 mln consensus range -- after cutting jobs to reduce costs.
   
And Tomkins shares dropped 13 pence to 322-1/4 after news Merrill Lynch is carrying out an accelerated bookbuilt secondary placing of approximately 76 mln
ordinary shares in the group, approximately 9.8 pct of its issued share capital.
   
The proposed sellers of the shares are Bear Creek and Gates Family Foundation.
   
On the macro front today, UK February construction PMI figures are unlikely
to spark much interest, while the only US data due today are the latest weekly jobless claims.
   
The main economic focus will therefore be the latest ECB council meeting, which is widely expected to hike European interest rates by a quarter point to 2.5 pct.

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US Summary

For a summary of US stocks at the close of trade, click here

Diary of Events

For a list of key UK financial and corporate events today, click here

Paris

PARIS - Market data at 08.25 GMT

Major indices:
   
CAC-40 up 16.24 points at 5,073.85
SBF-80 up 23.03 at 5,777.17
SBF-120 up 12.10 at 3,675.77

Volume: 465 mln eur
25 CAC-40 stocks up
15 CAC-40 stocks down

Major gainers:
   
LVMH, up 2.40 or 3.1 pct at 78.95 after reporting full year earnings in line with forecasts, while forecasting "very significant growth" for 2006.
   
Ubisoft Entertainment, up 1.81 eur or 5.6 pct at 34.95 after an upgrade to 'buy' from 'hold' at Deutsche Bank.
   
Alcatel, up 0.28 or 2.4 pct at 11.84 and leading gains among French technology names, as the sector benefits from the strong rise on the Nasdaq composite last night.

Major losers:
   
EDF, down 0.45 eur at 43.49 as investors take profits from strong recent gains, seen amid speculation that the proposed Suez/GDF merger could signal further consolidation moves.
   
Vinci, down 0.25 at 77.05 and extending declines seen yesterday as investors continue to take profits from the stock's strong advance ahead of the release of 2005 earnings, which had pushed it to an all-time high on Monday.

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FRANKFURT - Market data at 08.40 GMT

Major indices:
   
DAX 30 - 5,871.36, up 4.75 points or 0.08 pct
MDAX - 8,450.31, up 44.63 points or 0.53 pct
TecDAX - 748.48, up 1.26 points or 0.17 pct
DAX future - 5,879.50, down 5.00 points or 0.08 pct

Major gainers:
   
Deutsche Telekom, up 0.36 eur or 2.68 pct at 13.80, as investors welcomed the telecoms giant's consensus-beating fourth-quarter results and an increased dividend
   
Henkel, up 0.86 eur or 0.93 pct at 93.19, said it sold its Dial foods business to Pinnacle Foods Group Inc for 183 mln usd in order to concentrate on its core home and personal care businesses
   
Metro, up 0.33 eur or 0.74 pct at 44.89, as German retail sales rose 2.7 pct in real terms in January from December and were up 1.7 pct from January last year, according to preliminary figures from the Federal Statistics Office
   
Deutsche Boerse, up 0.61 eur or 0.57 pct at 106.87, after the exchange operator published strong trading statistics for February at its Eurex and Xetra divisions
   
Bayer, up 0.19 eur or 0.56 pct at 34.27

Major losers:
   
Adidas-Salomon, down 6.19 eur or 3.75 pct at 158.81, after the sports goods manufacturer reported a mixed set of fourth-quarter results, including a worse-than-expected net profit and a weak order backlog at recently acquired Reebok
   
Volkswagen, down 0.70 eur or 1.22 pct at 56.84
   
Munich Re, down 0.72 eur or 0.62 pct at 114.80, as full-year results from reinsurance peer Swiss Re disappointed investors
   
ThyssenKrupp, down 0.06 eur or 0.28 pct at 21.45
   
RWE, down 0.10 eur or 0.14 pct at 71.80

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