UK/Euro Financial Market Daily Morning Briefing 04-07-2007

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UK blue chips pushed higher in early deals this morning after Wall Street finished its pre-Independence Day session firmer. The uncertainty over tomorrow's UK rate decision and Friday's key US jobs report was offset by strength in hotel issues following Blackstone's offer for Hilton Hotels Corp.

At 9.08 am, the FTSE 100 index was 14.2 points firmer at 6,654.0, with all the broader FTSE indices higher.

Early volume was fair, with 216 mln shares changing hands in 43,239 deals.

Overnight on Wall Street, after a shortened trading session ahead of today's Independence Day holiday, the DJIA closed 41.90 points higher at 13,577.30, helped by the fresh takeover activity.

Meanwhile the S&P 500 index finished up 5.40 points at 1,524.85, and the Nasdaq composite index ended up 12.65 points at 2,644.95.

Today in Asia, the Nikkei 225 Index ended 18.82 points firmer at 18,168.72, while the Hang Seng Index closed 67.41 points higher at 22,218.55

Oil prices continued lower in subdued morning Asian trade in Singapore, with the market quiet due to the US Independence Day holiday and ahead of a weekly US energy inventory report.

New York's main oil futures contract, light sweet crude for delivery in August, was down 21 cents at 71.20 US dollars a barrel. Brent North Sea crude for August was three cents lower at 72.90 dollars.

In London, hotel issues made the main headway first thing this morning, with blue chips InterContinental Hotels up 62 pence at 1,320 and Whitbread up 88 pence at 1,841. Mid cap Millennium & Copthorne added 32 pence at 684 on a read-across from the 26 bln stg takeover move for Hilton Hotels Corp from private equity firm Blackstone Group.

Blue chip pub operators also found support, again helped by yesterday's good news from mid cap Greene King, with Punch Taverns up 44 pence from 1,306, Enterprise Inns ahead 18 pence at 705, and Mitchells & Butlers up 5-1/2 pence at 877.

Strength in property issues was an early feature as well with the sector bouncing back after recent falls on interest rate concerns, with British Land gaining 34 pence at 1,366, while Land Securities firmed 30 pence at 1,764, and Hammerson added 23 pence at 1,446.

Elsewhere, Rolls Royce continued to benefit from yesterday's upbeat trading statement, gaining 7-1/2 pence at 555.

A revival of vague break-up talk lifted Prudential shares 8 pence higher to 733, with peers Aviva up 15 pence at 770 helped by positive comment from Panmure Gordon today, and Standard Life ahead 3 pence at 331-1/2.

Compass Group shares gained 3-1/4 pence at 352-3/4 following good trading news from French contract catering peer Sodexho Alliance.

And British Airways added 3 pence at 421-1/2 ahead of this afternoon's June traffic numbers.

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UK Small Cap Report

For a summmary of today's trading on the FTSE 250 and the AIM, click here

Frankfurt

DAX - up 24.21 points, or 0.30 pct, at 8,074.89
MDAX - up 61.47 points, or 0.55 pct, at 11,226.59
TecDAX - up 4.14 points, or 0.43 pct, at 969.81
DAX futures - up 27.50, or 0.34 pct, at 8,145.00

Major Advancers:

Linde, up 1.52 eur, or 1.68 pct, at 92.12

Infineon, up 0.17 eur, or 1.35 pct, at 12.76, as traders pointed to strong sales of Apple's iPhone in the US, for which Infineon is providing the baseband circuitry

Volkswagen, up 1.41 eur, or 1.17 pct, at 122.01, after it saw strong June car sales in the US, raising sales by 15 pct over the same period last year on solid sales of its Jetta and Rabbit models

Bayer, up 0.54 eur, or 0.96 pct, at 56.95

Deutsche Telekom, up 0.12 eur, or 0.88 pct, at 13.79, after a report said the telecoms giant has won the exclusive marketing contract for German distribution of the Apple iPhone

Major Decliners:

DaimlerChrysler, down 0.75 eur, or 1.09 pct, at 67.86, after the company is to recall 81,000 2007 Jeep wrangler and Dodge nitro models because of an engine stalling problem

Metro, down 0.49 eur, or 0.79 pct, at 61.44

Deutsche Post, down 0.15 eur, or 0.63 pct, at 23.73

Munich Re, down 0.42 eur, or 0.31 pct, at 137.00

E.ON, down 0.19 eur, or 0.15 pct, at 124.20

Other Major Movers:

MDAX-listed MLP, up 0.60 eur, or 4.17 pct, at 15.00, as rumours circulate that Axa might be interested in taking over the financial services provider

MDAX-listed Depfa, up 0.39 eur, or 3.02 pct, at 13.30, after UBS began coverage on the Dublin-based bank with a buy rating and a target of 16 eur per share

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OMXC20 up 2.54 points at 495.01

OMXCB up 2.40 points at 478.01

OMXC up 1.83 points at 484.27

Turnover

1.119 bln dkr

Major gainers

Danske Bank up 5.50 dkr at 236.75

DSV up 2.25 dkr at 114.50

DS Norden up 3.00 dkr at 373.50

AP Moller Maersk up 400 dkr at 67,700

Major losers

Carlsberg down 6.00 dkr at 666.00

Novo Nordisk down 2.00 dkr at 615.00

Trygvesta down 1.50 dkr at 431.50

Milan

Main indices

Mibtel at 33,251, up 0.24 pct
S&P/Mib at 42,468, up 0.23 pct

Main S&P/Mib gainers:

Saipem up 1.84 pct at 26.03 eur, after Morgan Stanley increased its target by 29 pct to 31 eur, keeping an 'overweight' rating on the stock in a note on European oil service companies

Lottomatica up 1.76 pct at 30.01

Autogrill up 1.65 pct at 16.24, after Merrill Lynch raised its target to 17.5 eur from 15.5 following the launch of its takeover offer for Alpha Airports

Fiat up 0.70 pct at 22.95, continuing to reach fresh highs. The carmaker is today launching its promising new 500 model

Main S&P/Mib losers:

UBI Banca down 0.48 pct at 19.21, as its two-day rebound ran out of steam

Finmeccanica down 0.26 pct at 22.75

L'Espresso down 0.23 pct at 3.91

Luxottica down 0.21 pct at 28.44

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MAJOR INDICES

AEX 553.79, up 0.75 points
AMX Midcap 744.17, up 2.61 points
Government bonds lower

MAJOR GAINERS

Randstad up 2.20 pct at 61.35 eur after upgrade to 'buy' at Deutsche Bank
Unibail-Rodamco 1.64 pct higher at 190.06 eur
Ahold gains 1.59 pct at 9.60 eur on upgrade to 'overweight' at JP Morgan
Philips up 0.74 pct at 32.76
USG People up 2.49 pct at 36.18 eur
Ordina up 1.87 pct at 15.80 eur
Laurus surges 6.67 pct at 3.68 eur following its Q2 results last night
TKH up 1.79 pct pct at 22.75 eur after Rabo Securities ups target to 26 eur

MAJOR DECLINERS

Vedior down 1.76 pct at 22.32 eur after downgrade to 'hold' by Deutsche Bank
Heineken sheds 1.50 pct at 42.16 eur
Hagemeyer down 0.79 pct at 3.78 eur
Oce drops 1.33 pct at 15.56 eur
BAM down 0.42 pct at 21.23 eur
Boskalis Westminster down 0.17 pct at 28.60 eur

Madrid

IBEX-35 index up 23.00 points at 14,893.5

Major gainers:

Sol Melia, up 0.62 eur or 3.73 pct at 17.25, and NH Hoteles, up 0.47 or 2.93 pct at 16.53, boosted by the news of the the 26 bln stg takeover move for Hilton Hotels Corp from private equity firm Blackstone Group.

Main heavyweights, with Telefonica up 0.03 at 16.47, shrugging off concern over an expected decision today by the European Commission on whether to fine the company an estimated 100 mln eur for allegedly abusing its market dominance in broadband services.

BBVA, up 0.05 at 18.25, and Santander 0.02 higher at 13.79.

Banco Pastor, up 0.54 at 15.71, after UBS hiked its stance to 'buy' from 'neutral,' citing recent underperformance to Spanish banking peers.

Major losers:

Selected builders, with Sacyr Vallehermoso down 0.28 at 35.34, and FCC off 0.05 at 67.80.

Mapfre, off 0.02 at 3.67, on continued profit-taking after recent outperformance.

Antena 3, down 0.09 at 15.25.

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