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

London shares higher, bid talk at Alliance & Leicester, miners up on metal gains

London shares turned higher, after a solid performance on Wall Street last night, soaring copper prices and renewed bid speculation surrounding Alliance & Leicester seen supporting sentiment ahead of key US jobs data due later today, dealers said.
   
At 9.00 am, the FTSE 100 was up 8.7 points at 6,045.7, having opened 3 points lower at 6,033.9. The broader indices were firmer.
   
Early volume was modest at 171 mln shares trading in 27,481 deals.
   
Last night on Wall Street the DJIA closed up 38.58 points at 11,438.86, its best closing level since Jan 20.
   
Asia markets were closed today due to regional holidays and festivals.
   
Looking ahead to key US jobs data due at 1.30 pm, analysts were forecasting that around 200,000 new jobs were created last month, following on from the 211,000 new jobs created in March.
   
In London this morning, Alliance & Leicester surged nearly 10 pct, or 108 pence to 1,233, on reports that Spanish bank Banco Santander Central Hispano was in "exclusive talks" to acquire the UK mortgage lender in a deal reputed to be worth more than 6.5 bln stg.
   
The report in this morning's City AM, claimed Alliance & Leicester is thought to have indicated to potential suitors that it would accept an offer of around 6.7 bln, or 1,500 per share.
   
In response, WestLb reiterated its 'sell' advice and said, while it sees the commercial logic in such a deal, the price seems to be excessive.
   
It sees the only real synergies being cost with Santander buying into a strategically very weak business.
   
3i Group was another early riser, up 36 pence to 930, after Merrill Lynch added the venture capitalist group to its Europe 1 list, saying the shares appeared undervalued at current levels.

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Elsewhere, mining issues again dominated the leader board after copper futures rallied yesterday by more than 5 pct to a record level, and gold prices climbed 8 usd an ounce to send prices to their highest close in almost 26 years.
   
Antofagasta rose 67 pence to 2,526, Anglo American gained 40 to 2,440, Xstrata pushed 57 ahead to 2,204, and BHP rose 18 to 1,187.
   
Elsewhere, Cable & Wireles gained 2 pence to 104 on reports that mobile operator O2 was eyeing its Bulldog broadband division.
   
On the downside, oil issues dominated the early losers after oil slumped more than 2 usd overnight following a surprise increase in US petroleum stockpiles.
   
BG Group dipped 6 to 750, BP lost 3 to 678 and RDShell fell 14 to 1,937.
   
On the second line, Body Shop, rose 0-3/4 pence to 298-1/2 after reporting a 5 pct increase in full-year pretax profit and said sales trends have improved in its new year.
   
For the year to Feb 25 2006, the Littlehampton-based business, which trades from 2,133 branches across 54 countries, made profit before tax of 37.6 mln stg, up from 35.7 mln stg last time.
   
Staying on a retail theme, Matalan fell over 3 pct in early deals to 185 pence after brokers remained downbeat following the troubled retailer's recent 30 pct slump in full-year profits.
   
In response, Credit Suisse cut its price target on Matalan to 105 pence from 140 as it reiterated its 'underweight' stance.
   
In a note to clients, the broker said it is now predicting further pretax profit falls to 40 mln stg in 2007/08 with EPS of around 7 pence.

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Diary of Events

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

US Summary

For a summary of US stocks at the close of trade, click here

Amsterdam

AMSTERDAM - Market data at 10.27 am:

Major indices   

AEX index             468.27, up 1.68 point
AMX Midcap index      638.49, up 2.32 points
Government bonds      narrowly mixed

Major gainers:
   
VNU outperformed, rising 4.72 pct to 29.07 after the takeover bid for the
Dutch business information company was raised last night, with key shareholder Templeton saying it will accept the higher offer, increasing the chance the offer will be successful
   
TNT extended its run-up after Wednesday's strong first-quarter results, firming 2.4 pct at 30.77, with local broker Kempen raising its price target to 30 eur from 27
   
ASML rose 1.35 pct to 17.31, Philips put on 0.52 pct at 26.91
   
Among financials, Aegon climbed 1.27 pct at 14.30, ING was up 1.33 pct at 32.68 and Fortis gained 0.64 pct at 29.72
   
Staffing firm USG People added 0.8 pct at 69.50 as local broker Kempen raised its target to 85 eur from 66

Major losers:

Vedior lost 0.74 pct at 18.68 after Credit Suisse downgraded the stock to to 'neutral' from 'outperform' on valuation grounds following the group's recent robust first-quarter results
   
Oil sector stocks were down, with Royal Dutch Shell falling 0.62 pct at 27.06 and SBM Offshore losing 0.68 pct at 87.25
   
Buhrmann shed 0.92 pct at 14.04, Wolters Kluwer slipped 0.83 pct at 20.4  and Heineken was down 0.89 pct at 32.27

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PARIS - Market data at 9.56 am

Major indices:
  
CAC-40 up 17.22 points or 0.33 pct at 5,250.92
SBF-80 up 45.04 points or 0.74 pct at 6,145.37
SBF-120 up 13.64 points or 0.36 pct at 3,818.44

Volume: 541 mln eur
9 CAC-40 stocks up
27 CAC-40 stocks down
4 CAC-40 stocks unchanged
  
Major gainers:
   
Eiffage, up 2.90 eur or 4.85 pct at 62.70, after posting a 24.1 pct rise in first quarter sales
   
Vivendi, up 0.54 eur or 1.97 pct at 27.99
   
Vinci, up 1.05 eur or 1.30 pct at 81.95, after first quarter sales rose by a better than expected 12.8 pct.
   
Major losers:
   
Pernod Ricard, down 1.10 eur or 0.73 pct at 150.60
   
Thales, down 0.13 eur or 0.38 pct at 33.65
   
Suez, down 0.08 eur or 0.24 pct at 32.67, slightly eroding strong gains made yesterday after a solid first quarter sales report.

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FRANKFURT - Market data at 9.34 am

Major indices:
   
DAX 30 - 6,064.07, up 24.75 points or 0.41 pct
MDAX - 8,897.79, up 31.90 points or 0.36 pct
TecDAX - 742.33, up 2.69 points or 0.36 pct
DAX future - 6,084.00, up 24.00 points or 0.40 pct

Major gainers:
   
Deutsche Boerse, up 1.96 eur or 1.73 pct at 114.96, after the company last night reported consensus-beating first-quarter results, which included an EBITA comfortably ahead of even the highest forecasts, which prompted an upgrade at WestLB and a target hike at Deutsche Bank
   
Allianz, up 2.23 eur or 1.70 pct at 133.30
   
ThyssenKrupp, up 0.32 eur or 1.20 pct at 26.92
   
TUI, up 0.18 eur or 1.08 pct at 16.78
   
Munich Re, up 0.85 eur or 0.76 pct at 112.05

Major losers:
   
E.ON, down 6.36 eur or 6.34 pct at 93.99, as the stock trades ex-dividend today
   
BASF, down 1.42 eur or 2.06 pct at 67.59, as the stock trades ex-dividend today
   
Linde, down 1.20 eur or 1.69 pct at 69.94, as the stock trades ex-dividend today
   
Hypo Real Estate, down 0.54 eur or 0.98 pct at 54.61, as first-quarter results that were slightly ahead of consensus failed to inspire investors, with some expressing concern over margin pressure at the company's German operations
   
Henkel, down 0.85 eur or 0.88 pct at 95.57

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