UK/Euro Financial Market Daily Morning Briefing 06-10-2006

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London shares stay flat in early deals ahead of key US non-farm data

UK blue-chips remained flat in early deals as investors remained cautious ahead of today's all-important US non-farm payroll figures while in London Shire was a key feature with investors expecting approval in the US for its hyperactivity drug.
   
At 9.19 am the FTSE 100 was up 1 point at 6,004.6, remaining above the key 6,000 level, with the wider market mixed.
   
Meanwhile, Wall Street rose modestly yesterday, nudging the Dow Jones industrial average to its third straight record high close, as investors welcomed upbeat retail sales and jobless claims figures.
   
The Dow closed at 11,866.69, surpassing the record of 11,850.61 set Wednesday. The blue chip index traded up to 11,870.06, which stands as its trading high.
      
Across the way in Asia, Japan's Nikkei 225 ended the session down 13.27 points at 16,436.06, while in Hong Kong the Hang Seng rounded the morning down 15.52 points at 17,892.15.
   
In oil news, it appears that the shrinking oil price is spurring OPEC to look towards cutting production. Oil prices fell as skepticism set in about OPEC's comments on a possible emergency meeting to consider production cuts.
  
New York Mercantile Exchange's main contract, light sweet crude for November delivery, was down 0.36 usd to 59.67 usd a barrel from 60.03 usd in late trading in the US overnight, when the price had risen on reports that OPEC was ready to cut output.
   
In London, specialty pharma group Shire was in favour with investors, better by 13-1/2 pence at 885, on the back of news that it should find out today whether US medicine regulator have granted marketing approval for its new drug to treat hyperactivity, and the ruling is likely to have major impact on the company's share price.
   
Currently referred to as NRP-104, analysts expect the drug be a major profit driver for Shire in the next few years. Sales are seen topping 1 bln usd within two years of its launch, forecast for next year.
   
Peer AstraZeneca was also up in sympathy, increasing 10 pence to 3,363. The drugs firm was also helped by the announcement.
   
Another winner was Intercontinental Hotels 20 pence higher at 975, following better than expected numbers last night from US peer Marriott International.

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Marriott, the world's largest hotel company by revenue, announced that its third-quarter net income of 33 cents per share beat expectations of 30 cents, although its earnings weakened, falling 5.4 pct overall. Shares in Mariott rose over 2.52 usd to 40.85 on Wall Street.
   
On the downside, miners eased following a negative sector review by HSBC in which Antofagasta, down 4-1/2 at 458-3/4, Kazakhmys, dropped 12 pence to 1,066 and Xstrata, slowed 11 at 2,004, all suffered downgrades.
   
In a sector research note published this morning, the broker warned investors that UK-listed miners are not yet out of the woods as concerns over global growth remain and volatility is to persist.
    
Peer BHP Billiton was off 5 pence at 901, Rio Tinto dipped 17 pence to 2,470 while Vedanta topped the losers board, lighter by 23 pence at 1,189.
   
Vodafone, was also among the losers in early trade, down 1-1/2 pence at 124-3/4. The stock was downgraded to 'hold' from 'buy' at Deutsche Bank -- citing worries over fundamentals and valuation grounds.
   
The broker pointed out that it upgraded its stance on Vodafone in July as it believed the group's KPIs/results would show a stabilisation in the business underpinning group guidance.
   
Deutsche Bank said it also hoped several smaller assets would be disposed of and positive management change would be instigated. The broker pointed out that these expectations have now been delivered.
   
On the second tier, disappointing drilling news dented Soco International, down 49 pence at 1,435, making the stock the FTSE 250's biggest loser.
   
Earlier today, the group announced that its TGT-4X drill offshore Vietnam has encountered only 'residual oil', but the group noted this should have 'no impact of its reserves'.
   
Reacting to the news, Merrill Lynch said the news was 'clearly disappointing' and trimmed its NAV by 149 pence per share to 1,616 pence per share, but noted the broader investment thesis remained unchanged.
   
Sector peer Dana Petroleum felt the pressure of the news, dipping 16 pence to 1,149.
   
It appeared that investors no longer liked the idea that United Business Media could be a possible bid target, as the stock dropped 20-1/2 pence to 695. Yesterday traders had been talking up the possibility of interest from private equity. The rumours came hot on the back of an upgrade by Morgan Stanley to 'overweight' on Wednesday.

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The stock was also pulled lower on news that its CMP Information division (CMPi) has acquired a trade show and a conference in separate transactions worth a total of 576,000 stg. CMPi has acquired The Care Show, a twice-yearly trade show for the UK independent care market, for 450,000 stg.
   
In a separate transaction, CMPi has acquired the Air Traffic Control Maastricht Conference from Jane's Information Group for 126,000 stg.
   
On the upside, M&A news bolstered 250 riser Morgan Crucible up 8-3/4 pence at 293-3/4. Yesterday traders were buying in the stock on the back or rumour of a 315 per share bid. Formal approaches have yet been made.
   
M&A speculation also helped Premier Oil, racing 33 pence to 1,075. Rumours have recently circulated regarding a possible 1,300 pence a share bid from Mexican firm, PeMex.   
   
Sticking with bid news, Viridian today confirmed that it is considering an approach, which may or may not lead to an offer for the company. The Irish-based utility firm leaped, once again, to the top spot, up 94 pence at 1,315
   
Positive broker comment assisted Colt Telecom Group, increasing 3-3/4 to 136-1/2. The stock was  upgraded to 'equal-weight' from 'underweight' with a new price target of 145 pence at Morgan Stanley this morning, following the stocks 20 pct fall.
   
Morgan Stanley also raised its EPS by 46 pct in 2006 to 5.4 eur and in 2007 to 10.4 eur, and increased its medium-term gross profit and EBITDA estimates as a result of remodeling the gross margin mix.
   
Finally, easyJet, Europe's second largest no-frills airline, has raised its guidance for full year pretax profit after a better-than-expected revenue performance last month. The announcement pushed the stock 7-3/4 pence higher at 505-3/4.

UK Diary of Events

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

US Summary

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

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PARIS - Market data at 9.55 am:

Major indices:
   
CAC-40 down 0.79 point or 0.01 pct at 5,287.74
SBF-80 down 5.97 points or 0.10 pct at 6,012.93
SBF-120 down 1.02 points or 0.03 pct at 3,826.56

Volume: 340 mln eur
13 CAC-40 stocks up
22 CAC-40 stocks down
5 CAC-40 stock unchanged

Major gainers:
   
Arcelor-Mittal, up 0.39 eur or 1.41 pct at 28.09, amid continued merger and acquisition talk in the steel sector.
   
Bouygues, up 0.20 eur or 0.47 pct at 43.11
   
Pernod Ricard, up 0.70 eur or 0.43 pct at 163.70, after the Ricard family raised its stake to more than 10 pct.

Major losers:
   
Soitec, down 1.10 eur or 5.25 pct at 19.85
   
JCDecaux, down 0.35 eur or 1.61 pct at 21.34, after gaining strongly yesterday following an upgrade by Morgan Stanley.
   
EADS, down 0.24 eur or 1.14 pct at 20.81, amid continued uncertainty about key Airbus unit programs.

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FRANKFURT - Market data at 9.33 am  

Major indices:
   
DAX 30 - down 5.88 points or 0.10 pct at 6,069.40
MDAX - down 36.08 points or 0.42 pct at 8,5949.77
TecDAX - down 1.61 points or 0.24 pct at 659.82
DAX future - down 3.0 points or 0.05 pct at 6,115.50

Major decliners:
   
Deutsche Telekom, down 0.13 eur or 1.03 pct at 12.49, on market rumours of a possible bid for British Telecom dealers said.
   
Commerzbank, down 0.14 eur or 0.29 pct at 48.92, after Deutsche Bank CEO Ackermann last night once again downplayed the possible of a bid for its rival.
  
Munich Re, down 0.89 eur or 0.70 pct at 125.64
   
Deutsche Lufthansa, down 0.12 eur or 0.69 pct at 17.16, as oil remained above the 60 usd per barrel level
   
SAP, down 0.70 eur or 0.44 pct at 158.95

Major risers:
   
ThyssenKrupp, up 0.26 eur or 0.96 pct at 27.44, as Mittal's US production cuts are seen benefiting the steel market through end-2006.
   
MAN, up 0.52 eur or 0.79 pct at 66.52 eur, as bargain hunters bought the shares after it declined sharply early this week as investors deemed a takeover unlikely, dealers said
   
Hypo Real Estate, up 0.26 eur or 0.53 pct at 48.92
   
Deutsche Bank, up 0.40 eur or 0.41 pct to 97.83
   
Continental, up 0.40 eur or 0.44 pct at 91.97

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Amsterdam shares AFX at a glance outlook

Forthcoming Events
   
Tuesday
   
Laurus Q3 sales update

Today's Press
   
Euronext's Theodore flies to meet NYSE's Thain after Lachmann study
   
ING to more than double life assurance branches in India by end-2007
   
Van der Moolen to cut half of 200 US staff due to introduction of
electronic trading on Wall Street
   
Company News
   
Oce buys US co CaseData for undisclosed sum
  
Air France-KLM Sept load factor 82.8 pct vs 83.1, passenger traffic up 5.9 pct
   
ASMI says change to business model "could be seriously detrimental" to returning to front-end profitability
   
Nutreco completes 50 mln eur share buyback programme
   
Air France-KLM cuts fuel surcharges; long-haul charge reduced by 7 eur/flight

Market Sentiment
   
ASMI will be in focus after late yesterday saying changing its business model will hamper return to front-end profitability

Forex

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