UK/Euro Financial Market Daily Morning Briefing 03-04-2007

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London shares open firmer, Scottish & Southern surges on renewed bid hopes

Leading shares opened higher this morning as a firmer close to Wall Street and encouraging signs of a softening of the rhetoric coming out of Iran over the current stand-off reassured investors, with Scottish & Southern Energy up on renewed takeover hopes, dealers said.
   
At 8.20 am, the FTSE 100 was up 30.5 points at 6346.00, with the broader indices also higher.
   
In an interview on Channel 4 last night, the secretary of Iran's Supreme National Security Council, Ali Larijani, said that the crisis should be resolved by diplomatic means and that "there is no need for any trial."
   
Iran's previous demands that the UK Government should apologise for the personnel's incursion into Iranian waters seemed to have moderated with Larijani now saying Iran would be content with a guarantee given that "such violations would not be repeated."
   
In London this morning, Scottish & Southern Energy rallied 42 pence to 1,600 after German energy giant EON abandoned its 42.4 bln eur bid for Spanish peer Endesa raising hopes it now might turn its attention to the UK utility.
   
Elsewhere, Resolution ticked up 14 to 639 after the specialist UK life insurer said that 2006 full-year operating profit on an European Embedded Value (EEV) basis stood at 390.9 mln stg.
   
That was ahead of the 305-380 mln stg range of analysts' forecasts.
   
Meanwhile, miners ticked higher after base metal and oil prices rose last night. Kazakhmys rose 27 to 1182, while Rio Tinto took on 55 to 2943.
   
Last night on Wall Street, US stocks managed a moderate advance as a spate of takeover deals gave investors enough confidence to buy into the market despite a report showing that US manufacturing is more sluggish than expected.
   
By the close the DJIA was up 27.95, or 0.23 pct, to 12,382.30. The benchmark index is now 404 points below its record close reached Feb 20. Broader stock indicators also rose slightly. The Standard & Poor's 500 index rose 3.69 to 1,424.55, and the Nasdaq composite index edged up 0.62 to 2,422.26.
   
Over in Asia, the Nikkei 225 finished 215.64 points higher at 17,244.05, with the Hang Seng up 171.57 points at 19,981.27 by its mid session.
   
Looking at commodities, oil prices eased back on profit-taking as the international dispute over Iran's detention of 15 UK naval personnel continued.
   
A short while ago, New York Mercantile Exchange's main oil futures contract, light sweet crude for delivery in May, was 0.35 usd lower at 65.59.

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UK small caps open firmer, with Screen FX gaining on contract news

UK small caps were firmer in early trade, mirroring the wider market, with Screen FX around 23 pct higher on the back of contract news, dealers said.
   
The FTSE Small Cap index was 1.8 points up at 4,015.1 by 8.52 am, while the FTSE 100 was 28.4 ahead at 6,343.9.
   
Contract news gave a boost to Screen FX, 0.08 up at 0.43 pence. The digital advertising and communications specialist has been awarded a significant contract to supply digital flat screen networks for advertising and other media content across the Land Securities' portfolio of 13 shopping malls throughout the UK.
   
Tellings Golden Miller also made headway, ticking up 2 to 24-1/2, a swing to full-year losses being offset by an encouraging statement. The coach and bus services company has made an encouraging start to 2007 and is confident of achieving objectives for the year.
   
Buyers came for VI Group, 1-1/4 better at 16-1/4, after the international supplier of CAD/CAM software disclosed bumper full-year numbers, while Pennant International rose 1-1/4 to 26-1/2 as the provider of simulation and training systems and services to the defence and industrial sectors revealed higher full-year pretax profits, and said it has entered the current year with confidence, boosted by a stronger order book.
   
Modest progress was made by Afren, 2 firmer at 56-1/2, after the company gleaned Nigerian government approval for the Field Development Plan on the Okoro Setu project.
   
The approval is a further step towards the company meeting its target of 15,000-20,000 barrels a day by early 2008, said Bridgewell. The broker values the stock at 76 pence a share and advises clients to 'buy'.
   
On the new issue front, shares in Inland, which specialises in buying 'brown field' sites and enhancing their value by obtaining planning permissions, went up to 53 from a placing price of 50 pence as trading got underway on AIM.
   
Inland raised 50 mln before expenses.
   
On the downside, shares in Strategic Thought came under the cosh, sliding 16, or 18.08 pct, to 72-1/2 after the software company warned of full-year EBITDA losses due to a slower than expected performance recovery on delayed ARM licence sales worth 1.5 mln stg.

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It sees EBITDA losses of up to 0.4 mln stg, compared with EBITDA profit of 2.3 mln stg a year ago, and expects full-year revenue of 11 mln stg against 11.5 mln a year earlier.
   
The company expects EBITDA to break even in the second half and expects to pay an unchanged dividend in July.
   
Sellers were also about in Robotic Technology, 1-3/4 down at 17-1/2, after the company warned its trading performance will be weaker in the first half.
   
The company blamed a lower order intake in both businesses at the start of 2007, but added it expects recovery in the second half.
   
Also on the downside, Andor Technology eased 3-1/2 to 108 after the developer and manufacturer of high-performance digital cameras put out a mixed trading update.
   
Finally, shopping trolley maker Supercart dipped 0.50 to 7.00 against the backdrop of widening full-year losses. It expects 2007 to be "a turning point" for the company, however.

UK Diary of Events

For a diary of key financial and corporate events in the UK today, click here

US Summary

For a summary of US stocks at yesterday's close of trade, click here

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FRANKFURT - Market data at 10.22 am

Major indices
   
DAX - up 59.88 points, or 0.86 pct, to 6,898.66
MDAX - up 99.52 points, or 0.97 pct, to 10,346.68
TecDAX - up 3.98 points, or 0.47 pct, to 853.18
DAX futures - down 32.50 points, or 0.47 pct, to 6,993.22

Major advancers:
   
EON, up 6.90 eur or 6.76 pct at 109.00, as the market welcomed the company's decision to quit a potentially costly bidding endgame for Endesa SA, which leaves the German utility with a collection of lucrative aquisitions and has created speculation the German utility giant may now pay a special dividend, dealers said.
   
Continental, up 3.32 eur or 3.43 pct at 99.98, as rumours circulate of a 120 eur/bid for the tyre and autoparts manufacturer
   
SAP, up 0.55 eur or 1.63 pct at 34.20,
   
RWE, up 1.22 eur or 1.53 pct at 80.71
   
Fresenius Medical Care, up 1.59 eur or 1.45 pct at 110.94
   
Major decliners:
   
TUI, down 0.11 eur or 0.60 pct at 18.30
   
Lufthansa, down 0.12 eur or 0.58 pct at 20.51
   
Munich Re, down 0.70 eur or 0.55 pct at 126.05
   
Adidas, down 0.14 eur or 0.34 pct at 41.11
   
Deutsche Post, down 0.07 eur or 0.31 pct at 22.57

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AMSTERDAM - Amsterdam market data at 10.22 am

Major indices
   
AEX                 514.24, up 2.22 points
AMX Midcap          724.92, up 1.07 point
Government bonds    unchanged to slightly lower
   

Major gainers:
   
Numico advanced 2.8 pct at 39.60 and Unilever gained 1.01 pct at 21.99 as Morgan Stanley reiterated its 'overweight' rating for the former and 'equal-weight' for the latter, while Ahold put on 1.02 pct at 8.89
   
SBM Offshore added 1.4 pct at 27.55, Royal Dutch Shell firmed 0.72 pct at 25.12
   
Crucell rose 1.21 pct at 19.19 on news of a deal with US company Talecris Biotherapeutics to serve as an exclusive distributor in nine European countries for their protein drug Talecris
   
On the local market, Aalberts was 0.23 pct higher at 74.65 amid news of an acquisition for its flow control activities in France

Major decliners:
   
Oce sank 4.59 pct at 13.11 after the printer and photocopier maker posted first-quarter results showing a weak performance of its main DDS division
   
TNT was 0.12 pct lower at 34.63, off an early high of 35.07 after saying it plans to cut 6,500-7,000 jobs at its Dutch operations
   
TomTom was the only other blue chip faller, slipping 0.47 pct at 29.86, while digital map maker TeleAtlas shed 0.18 pct at 17.10

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PARIS - Market data at 10.23 am:

Major indices:
   
CAC-40 up 34.31 points or 0.61 pct at 5,679.87
SBF-80 up 23.55 points or 0.32 pct at 7,271.86
SBF-120 up 23.18 points or 0.56 pct at 4,181.87

Volume: 779 mln eur
37 CAC-40 stocks up
3 CAC-40 stocks down

Major gainers:
   
Suez, up 0.96 eur or 2.45 pct at 40.62, on speculation that EON may turn its sights toward the company now that it's not pursuing Endesa.
   
Michelin, up 1.91 eur or 2.30 pct at 84.97, amid rumours of a private equity bid for rival Continental and a tyre price rise by Bridgestone.
   
Alstom, up 1.54 eur or 1.57 pct at 99.85. Its CEO told Les Echos he sees hundreds of mlns of euros in sales from a new Russian joint venture to produce nuclear power plants.

Major losers:
   
Pernod Ricard, down 0.67 eur or 0.44 pct at 150.75
   
Vallourec, down 0.79 eur or 0.40 pct at 194.69, after posting the strongest gains among blue chips yesterday.
   
AGF, down 0.09 eur or 0.07 pct at 125.62

Most active stocks:
   
Suez, 94 mln eur
   
BNP Paribas, 66 mln eur, up 0.59 eur or 0.76 pct at 78.57
   
Total, 63 mln eur, up 0.29 eur or 0.55 pct at 52.68

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