UK/Euro Financial Market Daily Morning Briefing 03-09-2007

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London shares open higher after strong close in NY Friday; Sainsbury's up

UK blue chips opened higher, after a strong close to Wall Street on Friday, and ahead of interest rate decisions due in the UK and Europe later in the week, with good gains from J Sainsbury following reports Delta Two is to make a new bid for the supermarket chain.
   
At 9.01 am, the FTSE 100 index was 23.1 points higher at 6,326.4, with the FTSE 250 index firmer too, up 39.5 points at 11,348.7. Volume was light, with 125.7 mln shares changing hands in 34,998 deals.
   
On Friday on Wall Street the Dow Jones Industrial Average closed 119.01 points firmer at 13,357.74, ahead of today's Labor Day holiday.
   
Investors took comments from President Bush and Federal Reserve Chairman Ben Bernanke as reassuring signs that Wall Street will not be left to deal with problems in the mortgage and credit markets on its own.
   
Bernanke, speaking at the Fed's annual conference, said the central bank will "act as needed" to prevent the credit crisis from hurting the national economy. The major indices fluctuated on Friday but held their gains after President Bush spoke about a plan to help borrowers facing trouble paying their mortgages.
   
Among the broader stock indices, the Standard & Poor's 500 index ended 16.35 points ahead at 1,473.99, with the Nasdaq composite index up 31.06 points at 2,596.36.
   
Wall Street is closed today for the Labor Day holiday.
   
The mood today in Asia was subdued, with the Nikkei 225 index closing 44.16 points lower at 16,524.93 Meanwhile, the Hang Seng at midday was down 218.35 points at 23,765.79.
   
Oil prices were flat in Asian trade as reports showed that Hurricane Felix would likely bypass key US oil refineries.
   
New York's main contract, light sweet crude for October delivery, was off 3 cents at 74.01 usd per barrel, from 74.04 usd in late US trades on Friday, the first time the contract has topped the 74-usd mark since Aug 6.
   
The New York Mercantile Exchange is closed Monday for the Labor Day holiday. Brent North Sea crude for October delivery was 7 cents higher at 72.76 usd.

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In London, J Sainsbury was a big blue-chip gainer early on, up 7 pence at 561, after the Independent on Sunday said Delta Two looks set to make a revised bid for the supermarket chain.
   
The newspaper said the new offer, expected to include a higher cash element than the original 10.6 bln stg approach, could be made as early as this week.
   
Meanwhile, Barclays headed the blue-chip leaderboard, 17 pence firmer at 630-1/2, following a report in the Sunday Times that Bob Diamond, Barclays' investment banking boss, scotched fears that Britain's third-largest bank faces a black hole in its accounts from exposure to the turmoil in credit markets.
   
Elsewhere, GlaxoSmithKline shares perked up 10 pence to 1,305, after the Observer reported the company faces a shareholder revolt over its dismal share price performance, with anger spilling into discussions between investors and chairman Sir Christopher Gent over who should succeed chief executive Jean-Pierre Garnier.
   
Positive broker comment provided the spur for ICAP, 4-1/4 pence firmer at 492-1/4, with Morgan Stanley raising its price target on the UK interdealer broker to 550 pence from 515 to reflect earnings per share tweaks (2008 and 2009 up 2 pct) on improved fundamentals, and keeping its 'equal-weight' rating on the group.
   
Turning to the blue-chip casualties, losses were seen among the mining stocks -- reversing Friday's gains -- against a backdrop of slipping metal prices, with Anglo American down 14 pence at 2,830, Kazakhmys losing 7 pence to 1,262 (ahead of tomorrow's interim results), and BHP Billiton down 10 pence at 1,449.
   
Lonmin, meanwhile, saw gains early on, up 21 pence at 3,136, after Goldman Sachs raised its stance on the company to 'buy' from 'neutral' with an increased target of 4,120 pence from 3,945.
   
Looking at the midcaps, HMV was the top gainer early on, up 5-3/4 pence at 129, after Deutsche Bank upgraded its rating on the company to 'buy' from 'hold' with a target of 135 pence, saying it believes that the market is attaching little credibility to new CEO Simon Fox's plans to stabilise HMV and then grow medium-term profits.
   
The broker added that as the most shorted stock in the entire UK market, any good news could see HMV shares rise quickly.
   
And shares in the London Stock Exchange experienced advances early on too, up 18 pence at 1,384, following a Sunday Times report that Qatar has joined the fight for supremacy over European stock markets by making an indicative offer close to 1 bln stg for Nasdaq's one-third stake in the LSE.
   
The newspaper added that the Gulf investors have not ruled out making a full bid for the LSE at a later date.

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In earnings news, shares in IMI took on 8-1/2 pence to 572, after the engineering group reported first-half pretax profit of 95.5 mln stg compared with 88.1 mln stg in 2006, against market expectations of 90-93 mln stg, and said it was confident of further progress in the remainder of the year.
   
And shares in Regus climbed 2 pence to 135-1/2 after the world's largest workstations provider posted a sharp rise in half-year profit, leading Credit Suisse to reiterate its 'outperform' stance on the group.
   
Earlier this morning, Regus said pretax profit soared 71.8 pct for the six months ended June 30 to 53.6 mln stg compared with 31.2 mln stg, helped by robust workstation growth and operational improvements in the UK.
   
And finally, on the back foot, shares in Taylor Nelson Sofres were down 3 pence at 226-1/2, after reporting an 8.2 pct rise in half-year profits, in line with market expectations, and said its US custom research business had returned to growth.
   
The world's second largest market research company, which researches consumer habits in industries ranging from supermarkets to broadcasters and analyses market trends, said adjusted pretax profit for the six months to June 30 was 36.9. mln stg compared with 34.1 mln a year earlier and broadly in line with the 37 mln stg analysts' average forecast.

UK Diary of Events

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

US Summary

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

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MILAN - Market data at 9.40 am

Main indices:
   
Mibtel down 0.01 pct to 31,278
   
S&P/Mib down 0.02 pct to 40,178

Main S&P/Mib gainers:
   
Unipol up 2.00 pct at 2.55 eur, after weekend comments by its CEO Carlo Salvatori, who said the company will return its excess capital to the market if no value-creating merger is found
   
Bulgari up 0.63 pct at 10.37
   
Fiat up 0.47 pct at 19.56
   
Luxottica up 0.28 pct at 25.13
   
Main S&P Mib losers:
   
Alitalia down 2.75 pct at 0.812. The company is due to meet with trade unions today to discuss job cuts, daily La Repubblica said
   
Telecom Italia down 0.62 pct at 2.07
   
Atlantia down 0.53 pct at 24.34
   
Parmalat down  0.38 pct at 2.64

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BRUSSELS - market data at 10.20 am;

Main index
   
Bel 20 up 8.63 points or 0.20 pct at 4,359.46.

Bel 20 gainers
   
KBC up 1.73 eur or 1.88 pct at 93.75 following the announcement on Friday of KBC Ancora's full-year results, which saw net profit up 35 pct year-on-year.
   
Cofinimmo up 1.32 eur or 1.05 pct at 127.46
   
Dexia up 0.24 eur or 1.19 pct at 20.45
   
InBev up 0.08 eur or 0.13 pct at 60.28. ING increased their target to 68.00 eur from 65.50, maintained 'buy' recommendation.
   
GBL up 0.27 eur or 0.31 pct at 87.00. The holding group is in focus on news of the new Suez-Gaz de France merger plan.
   
Bel 20 fallers
   
Suez down 0.71 eur or 1.70 pct at 40.94. Suez and Gaz de France said their boards have agreed to a revised merger plan calling for the French government to hold more than 35 pct of the combined company's capital and for 65 pct of Suez Environment to be spun off to Suez shareholders.
   
UBS rasies its target to 47.50 eur from 46.50.
   
Fortis down 0.07 eur or 0.26 pct at 26.84

Outside the Bel 20
   
Kinepolis up 2.39 eur or 5.31 pct at 47.40 eur on low trading volumes following a target upgrade at ING last Friday to 57.00 eur from 55.00
   
Distrigas up 169.00 eur or 3.84 pct at 4,570.00. KBC Securities ups to 'accumulate' from 'reduce'.
   
KBC Ancora up 1.45 eur or 1.90 pct at 77.60.

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AMSTERDAM - market data at 10.28 am
  
Major indices
   
AEX               524.54, up 1.81 points
AMX Midcap        723.85, up 2.97 points
Government bonds  lower

Major gainers
   
KPN rose 2.19 pct to 11.69 eur after it announced an extra 500 mln eur share buyback
   
ASML put on 1.20 pct to 21.99 eur
   
ABN Amro added 1.08 pct to 34.50 eur amid reports that Dutch unions have started a last-ditch offensive to persuade ABN shareholders to vote against a takeover of the bank by any party
   
Ahold rose 0.20 pct to 9.82 eur after a price target upgrade at ING
   
Van der Moolen rose 5.11 pct to 3.70 eur
   
BAM added 1.86 pct to 20.25 eur, two days ahead of its first-half earnings

Major decliners
   
Stork dropped 1.87 pct to 46.57 eur after news that major shareholder Marel now has 43.3 pct of Stork shares, making it difficult for predator Candover to succeed buying Stork
   
Corio dropped 0.93 pct to 56.65 eur
   
Heineken shed 0.58 pct to 46.21 eur

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