UK/Euro Financial Market Daily Morning Briefing 03-05-2006

London shares pare gains in early deals as BSkyB offsets oil, mining strength

Leading shares were flat in early deals, reversing initial gains, as strength in mining and oil stocks were tempered by disappointing numbers from BSkyB, dealers said.
   
At 9.10 am, the FTSE 100 was 0.4 firmer at 6082.5, off an opening high of 6100, with the broader indices all positive.
   
Meanwhile on Wall Street, US stocks ended higher as a number of solid earnings reports and a rally in oil, mining and metals shares lifted the DJIA to a six-year high and the S&P 500 Index to its best level in more than five years.
   
The Dow industrials rose 73.16 points to 11,416.5, its best closing level since January 2000 as the S&P added 8.02 points to end at 1,313.21 - its highest close since February 2001.
   
And the positive sentiment spilled over into Asia with the Hang Seng ending up 158.94 at 17,026.98, while the the Nikkei was closed for a public holiday.
   
Still in Asia, oil prices continued higher as on-going worries about Iran's controversial nuclear programme fuelled speculative-driven gains.
   
Earlier this morning, New York's main contract, light sweet crude for June delivery was up 28 cents at 74.89 usd a barrel from its close of 74.61 usd in the US yesterday.
   
Back in London, unsurprisingly oil majors were courted with BG the main beneficiary, up 7-1/2 at 771, after the group saw earnings double in the first quarter, thanks to high gas prices and volumes.
   
In the three months to March, the group's net profit before exceptional items rose 109 pct to 563 mln stg from 269 mln last time, ahead of the consensus forecast of 545 mln stg. 

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In response, Merrill Lynch reiterated its 'buy' advice and raised its price target by 12 pct to 840 pence.
   
Peers Royal Dutch Shell added another 5 pence at 1993, BP was also 5 higher at 693 and Cairn firmed 36 at 2484.
   
And investors continued to chase mining heavyweights on the back of the seemingly endless rise in commodity prices, aided by the weak dollar.
   
This morning copper flirted with record highs following on from news gold hit a fresh 25 year peak yesterday.
  
The sector was further in focus after an in-line update from Kazakhmys, up 1 at 1195-1/2, with peers Anglo American up 44 at 2540, BHP 12 firmer at 1182, Xstrata 36 higher at 2099 and Rio Tinto 44 to the good at 3195.
   
Elsewhere, broker comment helped to drive sentiment with in Sage 5-3/4 firmer at 250-3/4 after UBS upgraded the software group to 'buy' from 'neutral' ahead of interim results on May 9.
   
Still in broker comment, Northern Rock rose 20 at 1090 after Deutsche Bank lifted its stance on the mortgage bank to 'buy' from 'hold' ahead of the implementation of risk management regulations.
   
Remaining in financials, Man Group was the top riser, 82 firmer at 2673 after the fund manager revealed a 1.95 pct weekly hike in its key US fund.   

On the downside, British Sky Broadcasting fell 8 at 521-1/2 after the broadcaster reported a steep year-on-year fall in customer growth, reflecting growing competition in the UK pay-TV market.
   
In the third quarter, the group added some 40,000 new subscribers compared to a 95,000 rise in 'direct-to-home' customers in the comparable period last year.
   
The consensus forecast called for between 30,000-50,000 new subscribers.
   
Still in earnings, BAT fell 6 at 1395, hit by profit taking after the tobacco group posted forecast-busting first quarter results alongside a bullish outlook statement.

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The group also suffered as higher bond yields in the US and the strong market sentiment meant defensive stocks were out of favour.
   
Peer Gallaher fell 4 at 856-1/2 in sympathy.
   
Fellow faller Friends Provident was down 4-1/2 to 193 on news after the close yesterday that unlisted Dutch insurer Eureko BV is offering up to 77.365 mln ordinary shares in the insurer through an accelerated bookbuild.
   
On the second-line, M&A talk helped to lift sentiment, with Mitchells & Butler 16-3/4 firmer on on-going talk of an impending bid for the pubs group from property tycoon Robert Tchenguiz.
   
De Vere was also higher on bid talk, 27-1/2 firmer at 851-1/2, with Resolution up 17 at 647 on the back of a report the insurer is in talks to buy 29 bln stg of closed life funds from Santander's Abbey.
  
easyJet PLC was also courted after the no-frills airline upgraded its guidance for the full year as it posted first half results ahead of expectations, 11 higher at 324.
   
And a reassuring trading update provided the spur to Spirent -- 2-3/4 to the good at 45-1/2.
   
On the downside, EMI was knocked by 7-3/4 to 274-1/4 after the group confirmed it made an approach to Time Warner Inc's Warner Music about a 28.50 usd cash and share offer for its US rival.
   
EMI said today that the offer was rejected but that it remains interested in a deal at the right price.
   
And finally an uninspiring trading update from automotive engineering group Tomkins sent the shares down 12-1/4 at 326 -- the top mid cap casualty.

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Diary of Events

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PARIS - Market data at 9.38 am:

Major indices:
   
CAC-40 up 25.96 points or 0.50 pct at 5,267.15
SBF-80 up 18.80 points or 0.31 pct at 6,078.88
SBF-120 up 17.67 points or 0.46 pct at 3,823.22

Volume: 425 mln eur
32 CAC-40 stocks up
8 CAC-40 stocks down
   
Major gainers:
   
Capgemini, up 2.39 eur or 5.58 pct at 45.19, after reporting strong first quarter sales and raising its full year sales guidance.   
   
Dexia, up 0.40 eur or 1.91 pct at 21.38. It is part of a banking group that has built up a stake in Euronext, which said today it has ended merger talks with London Stock Exchange as talks with Deutsche Boerse continue.
   
Veolia Environnement, up 0.83 eur or 1.74 pct at 48.49
   
Euronext, up 0.60 eur or 0.85 pct at 71.25

Major losers:
   
Thomson, down 0.10 eur or 0.62 pct at 16.00
   
Lagardere, down 0.35 eur or 0.54 pct at 65.05
   
Vivendi, down 0.15 eur or 0.52 pct at 28.72

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FRANKFURT - Market data at 9.31 am

Major indices:
   
DAX 30 - 6,074.76, up 23.47 points or 0.39 pct
MDAX - 8,914.88, up 55.85 points or 0.63 pct
TecDAX - 741.25, up 3.85 points or 0.52 pct
DAX future - 6,095.50, up 10.50 points or 0.17 pct

Major gainers:
   
Deutsche Bank, up 1.46 eur or 1.50 pct at 98.69, after the bank reported a set of first-quarter results that beat consensus estimates, and proposed a new share buyback programme
   
MAN, up 0.93 eur or 1.49 pct at 63.37
   
Volkswagen, up 0.73 eur or 1.19 pct at 61.90, after peer BMW reported strong first-quarter results
   
ThyssenKrupp, up 0.27 eur or 1.00 pct at 27.25
   
BMW, up 0.37 eur or 0.85 pct at 43.78, as the market welcomed the automaker's first-quarter results, which included better-than-expected net and pre-tax profit, but a below-consensus sales figure
   
Major losers:
   
Altana, down 1.43 eur or 2.82 pct at 49.25, trading ex-dividend, having paid out a dividend of 1.10 eur per share following its AGM yesterday
   
Henkel, down 1.94 eur or 2.01 pct at 94.76, as a below-consensus first-quarter net profit outweighed better-than-expected sales and organic growth
   
Metro, down 0.89 eur or 1.98 pct at 44.00, after the retailer reported first-quarter results that received a mixed response from the market, with one dealer describing the figures as "weak" and "in-line" with expectations
   
Hypo Real Estate, down 0.51 eur or 0.90 pct at 55.94
   
Deutsche Telekom, down 0.06 eur or 0.41 pct at 14.43

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AMSTERDAM - Market data at 10.25 am:

Major indices

AEX index at 471.13, up 1.0 point
AMX Midcap index 633.07, up 3.74 points
Government bonds broadly down

Major gainers:

SBM Offshore up 3.77 pct to 89.45 eur after winning orders worth 750 mln usd and a price target raise by Delta Lloyd

TNT up 2.40 pct at 28.99 eur after posting first-quarter figures which beat expectations, and saying sale of Logistics division 'in progress'

Hagemeyer rose 3.02 pct to 4.43 eur

Philips rose 0.25 eur to 27.41 eur

LogicaCMG gained 2.99 pct to 2.76 eur

ING was up 0.16 eur at 32.39 eur

Aegon rose 0.11 eur to 14.38 eur

Corus Group moved 1.57 pct to 1.29 eur

Major losers:

Buhrmann was down 4.28 pct to 14.98 eur after reporting first-quarter results in line with expectations but which showed some weakness in organic revenues

Getronics lost 4.42 pct to 9.28 eur after a first-quarter trading update provided less information than the market had hoped for.

Unilever was down 0.40 eur at 57.40 eur

Royal Dutch Shell was down 0.03 eur at 27.56 eur

Heineken slipped 0.14 eur to 32.72 eur

Ahold lost 0.02 eur to 6.47 eur

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