UK/Euro Financial Market Daily Morning Briefing 03-11-2006

£28,438 Spread betting Profit in the past 3 months!  A Must-See for serious traders! Click here for more.

London shares flat in early deals; BSkyB higher, BA lower after results

UK blue chips were a touch easier in early morning deals, slipping back from a good opening advance in cautious trade ahead of today's key US October jobs report, with BSkyB pushing higher but British Airways staying lower after quarterly results today, dealers said.
   
At 9.07 am, the FTSE 100 index was 1.3 points lower at 6,148.2, albeit above an early low of 6,143.8, having retreated from an opening peak of 6,165.4.   The broader FTSE indices were all weaker as well. Early volume was fair, with 174 mln shares changing hands in 27,709 deals.
   
Overnight on Wall Street, the DJIA closed 12.48 points lower at 12,018.54, while the S&P 500 index lost 0.47, to end at 1,367.34, and the Nasdaq composite index slipped 0.33 points to 2,334.02.
   
New York stocks extended their recent poor run after further weak economic data, with news that US productivity was flat in the third quarter, while wages rose nearly 4 pct, touching off concerns that the Federal Reserve will continue to wrestle with inflation, and possibly raise interest rates again.
   
Today's main focus will be on the US jobs report, with economists expecting a 135,000 jump in US non-farm payrolls in October, after a 51,000 advance in September, although the jobless rate is forecast to remain static at 4.6 pct.
   
In Asia, Tokyo markets were closed for a public holiday today, while in Hong Kong, the Hang Seng ended at a record high, up 34.91 points at 18,749.69.
   
In London, corporate news provided the main focus early on as the blue chip market trod water awaiting this afternoon's key US data. 
   
Shares in BSkyB added 6 pence at 556 after first quarter results from the satellite broadcaster showed strong subscriber growth, prompting ABN Amro and Merrill Lynch to repeat 'buy' ratings.
   
BSkyB saw the subscriber base for its mainstay pay-TV service rise by 82,000 to 8.258 mln in the three months to the end of September, outstripping the 60,000 consensus forecasts.
   
BSkyB said it had managed to hook up some 74,000 new customers to the internet by the end of October after launching Sky Broadband during the summer.  But after the slow start, BSkyB said it is now receiving 20,000 orders for broadband every week.
   
In its initial reaction, ABN Amro said the first quarter figures look fine, although it noted that the group's churn rate was above expectations at 11.8 pct versus a consensus forecast of 11.5 pct.
   
Meanwhile Merrill Lynch pointed out that while Broadband registrations and TV subscriber additions were better than expected, BSkyB's financials, while in line at the revenue level, were 3 pct light at the operating profit and headline EPS level.

Rock memorabilia auction house: closes 05/11/2006 
UK property development: closes 10/11/2006 
Natural resources investment company: closes 30/11/2006 
Hospitality and sports venue in Piccadilly: closes 27/03/2007
Click here to find out more

The US broker said it is downgrading its headline EPS for BSkyB by about 5 pct because of weak advertising, the extra programming cost for TV series 'Lost' and a cut in multi-room penetration.
   
But Merrill Lynch concluded that the good first quarter subscriber results for both broadband and television reinforce its 'buy' argument for BSkyB.
   
Shares in British Airways, however, shed 8-3/4 pence at 456-1/2 reflecting some caution over the group's lowered full-year revenue growth expectations, although brokers attempted to play down concerns.
   
British Airways reported second quarter underlying operating profit in line with market expectations this morning but said the aftermath of the August 10 terrorist alert cost it 100 mln stg.
   
The UK flag carrier also edged-down its full-year revenue growth expectations and announced plans to sell the regional operations of its BA Connect unit to privately owned low cost carrier Flybe, taking a 106 mln stg impairment charge.
   
For the three months to Sept 30, BA made an underlying operating profit of 240 mln stg. This compares to analyst forecasts of 220-254 mln stg, with a consensus of 235 mln stg, and 261 mln stg achieved in the same period last year.
   
In reaction, Merrill Lynch repeated its 'neutral' recommendation, arguing that although it has lowered its 2007 revenue growth forecast to 5 pct, it is encouraged by the recent softening of hand baggage regulations and expects to see a gradual improvement in traffic.
   
Rexam was the top FTSE 100 faller early on, shedding 22 pence at 555-1/2 in reaction to news of product delays in its beauty packaging unit and a resulting 10 mln stg charge.
   
Ahead of a site visit to its Beverage Can and Plastic Packaging operations in Chicago next week, the group said it sees flat profits for plastic packaging in the second half compared with first half due to product launches in make-up not materialising as expected.
   
Rexam said it is now initiating the necessary actions to reduce the cost base of its make-up operation, resulting in a restructuring charge in 2006 of about 10 mln stg.
   
In reaction, Citigroup repeated its 'hold' recommendation on Rexam, noting that the delayed new product launches will result in flat second half profits in the make-up unit, a 8 mln stg shortfall against its forecasts.
   
Elsewhere with the blue chips, ICI was a faller on profit-taking after yesterday's third quarter results, while WPP Group shed 5-12/2 pence at 660 after disappointing third quarter sales numbers from French peer Publicis.
   
But a more positive European read-across came from German insurer Allianz which reported better-than-expected third quarter numbers and raised its full year guidance slightly.

Save up to 50% on Jermyn Street style shirts and accessories, from silk ties to silver cufflinks, by shirt-maker Joseph Turner.
Click Here

Among UK blue chip insurers, Friends Provident took on 2-3/4 pence at 206-3/4, helped by its recent new business numbers, while Standard Life added a penny at 287-1/2 also aided by AXA bid speculation again, and Royal & Sun Alliance firmed 0-1/2 pence at 149-1/4, with Cazenove positive on the stock as well today in a new business numbers preview.
   
Meanwhile Unilever was a good gainer again following yesterday's better than expected third quarter numbers, adding 11 pence at 1,365 helped too by news of an upgrade to 'neutral' from 'underweight' by JP Morgan among other positive broker comment.
   
And Smith & Nephew shares rallied 1-1/4 pence higher to 489 after big falls yesterday following Q3 results and worries over the impact of a possible merger with Biomet of the US.
   
On the second line, Investec shares topped the FTSE 250 risers board, up nearly 3 pct with a 16 pence rise to 555  after the broking firm released an upbeat trading statement.
   
Investec said all of its business units enjoyed a "strong performance" in the first half, and expects earnings to be 34-40 pct higher than in the first half of last year.
   
In response, Bridgewell Securities reiterated its 'buy' advice and said it continues to believe the stock is fundamentally under-valued.
   
Carphone Warehouse shares also moved higher, up 7-1/2 pence to 291 rallying after declines following yesterday's interim results.
   
But on the downside, AGA Foodservice was the main casualty, down 22 pence at 384 in reaction to news after the close last night that it had been rebuffed in a merger approach to catering equipment peer Enodis -- shares in which also shed 6-3/4 pence at 191-3/4.

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 yesterday's close of trade, click here

Nick a few quid on the FTSE 100. Up or down? You decide. Bet on the FTSE direction every 30 minutes daily. Click here.

PARIS - Market data at 10.05 am:

Major indices:
   
CAC-40 down 1.51 at 5,308.56
SBF-80 up 15.95 at 6,264.09
SBF-120 up 0.06 at 3,861.42

Volume: mln eur
14 CAC-40 stocks up
5 CAC-40 stocks unchanged
21 CAC-40 stocks down

Major gainers:
   
Alstom up 1.45 or 2.00 pct at 74.00 as co asks Paris court to suspend award of 2.7 bln eur Paris-region rail order to Bombardier
   
Bonduelle up 2.30 or 2.74 pct at 86.30
   
TF1 up 0.47 or 1.77 pct at 27.06
   
Vivendi up 0.26 or 0.87 pct at 30.15; Maroc Telecom unit Q3 sales in line; fresh takeover rumours circulate

Major losers:
   
Publicis down 1.54 or 5.14 pct at 28.40 after weak Q3 sales, lowered FY guidance; Merrill cuts to neutral vs buy
   
EDF down 0.35 or 0.74 pct at 46.92
   
Trigano down after FY profit warning

Trade shares for a living with Intelli-trend 250
Click Here to find out more.

AMSTERDAM - Market data at 10.02 am:

Major indices
   
AEX                 484.91, up 0.87 point
AMX Midcap          626.42, up 0.59 point
Government bonds    narrowly mixed

Major gainers
   
Vopak rose 3.47 pct to 31.30 after the company put out a strong set of third quarter results and raised its full year outlook   
   
Vedior led blue chip gainers, up 1.14 pct to 14.15, USG People added 2.56 pct to 32.10 and Randstad put on 1.28 pct to 48.20 as the staffing groups all  benefitted from peer Adecco's better-than-expected third-quarter results
   
Univar lifted 1.59 pct to 40.85, extending yesterday's gains after a "solid" third-quarter trading update, as F. van Lanschot Bankiers upgraded its recommendation to 'accumulate' from 'hold' to reflect a more positive stance on the company
   
Fugro went 0.53 pct higher to 33.98 as ABN Amro upgraded the oil services group to 'buy' from 'add' with a raised target of 40 eur from 36. SBM Offshore advanced 0.56 pct to 23.45 and Royal Dutch Shell added 0.52 pct at 26.96
   
Heineken firmed 0.53 pct at 36.31 as Cazenove upgraded the brewer to 'outperform' from 'in-line' on valuation grounds

Major losers
   
Wessanen sank 5.19 pct to 9.87 after the health food retailer came out with a disappointing set of third-quarter results and lowered full-year forecasts
   
Unilever gave up 22 cents or 1.11 pct at 19.68, trading ex-dividend of 23 cents
   
Akzo Nobel eased 0.43 pct at 43.60 amid a newspaper report the company's planned IPO of its Organon unit will be delayed until next year 

A straight forward booklet from Hargreaves Lansdown that explains all about SIPPs
Click Here to reserve your FREE copy

FRANKFURT - Market Data at 9.15 am

DAX up 4.90, or 0.08 pct, at 6,228.23
MDAX up 11.64, or 0.14 pct, at 8,691.02

Top DAX risers
   
Commerzbank AG, up 2.73 pct at 28.57; confirms 15 pct ROE target from 2010
   
Allianz, up 0.1 pct at 145.19 after strong all round Q3 results; co raises guidance
   
DaimlerChrysler, up 0.8 pct at 45.31 after newspaper report that affiliate EADS wants a German banking consortium to become one of its major shareholders,   

Munich Re, up or 0.31 pct at 126.92; receives licence to deal in reinsurance in Russia
   
E On AG, up 0.56 pct at 92.25; ongoing Endesa takeover bid, Spanish government widely expected to remove conditions today

Top DAX fallers
   
MAN AG, down 1.39 pct at 69.53
   
Linde, down 0.53 pct at 76.60
   
BASF, down  0.59 pct 67.43; Stock rating cut to 'sell' from 'hold' on weaker results by Citigroup
   
Lufthansa, down 1.45 pct at 17.67
   
Metro AG, down 0.72 pct at 45.54; ongoing weakness on missed Q3 EBIT for German ops

Forex

ADVFN Services