UK/Euro Financial Market Daily Morning Briefing 06-11-2007

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London shares firmer; Dow closes off lows, miners and earnings give lift

Leading shares were higher early on, helped by a stronger mining sector and a raft of earnings news which broadly met expectations, although investors appeared reticent in the face of weaker data from the high street.
   
By 9.00 am, the FTSE 100 was up 48.5 points at 6,509.8 after closing down 69.2 points at 6,461.4 on Monday. The broader FTSE 250 was up 84.6 at 11,398.00.
   
Early volume was average with 179 mln shares changing hands in 47,214 deals.
   
Yesterday, the Dow Jones industrial average fell 51.70, or 0.38 pct, at 13,543.40. The Dow was down nearly 150 points early in the session and briefly popped into the plus side in the late afternoon.
   
The Standard & Poor's 500 index fell 7.48 to 1,502.17, and the Nasdaq composite index fell 15.20 to 2,795.18.
   
Over in Asia, the Nikkei 225 index finished down 19.3 points at 16,249.6, with the Hang Seng closing up 370.7 at 29,313.00.
   
In London this morning, and among early movers, mining stocks were in evidence at the top of the leader board as copper and precious metal prices recovered some of their shine and investors sought beta-rich stocks in early deals.
   
Vedanta added 61 to 2161, Xstrata put on 65 to 1677, Rio Tinto gained 83 to 4280 and BHP rose 40 to 1740.
   
Elsewhere, Invesco added 16-1/2 to 709 after Morgan Stanley upgraded its stance to 'overweight' from 'equal-weight', raising its target on the stock to 850 pence from 730 pence, on the prospect of a multiple re-rating from the US re-listing in December.
   
Elsewhere, Tullow Oil pushed 17 higher to 664 after Hungarian oil-and-gas group MOL Nyrt said it agreed to acquire a 40 pct stake in a new offshore block in Cameroon from its UK peer.

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Staying with financials, Alliance & Leicester recovered some of the previous session's heavy falls after playing down vague market speculation that it has approached the Bank of England for emergency funds.
   
Rumours swirled in the market Monday that it had approached the Bank of England for emergency funds, sending its shares lower.
   
Barclays also ticked higher, up 8 at 529 after falling yesterday to a 3-year low on renewed fears over the bank's vulnerability to the credit crunch.
   
In earnings news, Marks & Spencer ticked up 13 at 644 after reporting a better-than-expected 11.5 pct increase in first-half underlying pretax profit.
   
The retailer also hiked its interim dividend 31.7 pct and announced plans for a 1 bln stg share buyback.
   
Liberty International ticked up 14 to 1141 after reporting a rise in third-quarter pretax profits and upbeat outlook despite the challenging environment.
   
Turning to the downside, AB Foods, the agriculture to retail group, fell 17 to 895 after reporting full-year earnings which were ahead of market expectations but warned that reform of the EU sugar regime will have a "further large negative effect" on profit for the coming year.
   
And Yell Group pared opening gains to trade 13 lower to 655 on continuing concerns surrounding its US operations even though first-half earnings beat consensus forecasts.
   
Yell's US sales grew by 4.1 pct at constant currencies, but contracted by 3.4 pct in sterling, to 439.7 mln.
   
And in broker-generated news, J Sainsbury remained under the cosh, off 3-1/4 at 437 after SG Securities downgraded the grocer to 'sell' from 'hold' following the collapse of the proposed 10.6 bln stg takeover deal yesterday, causing the company's share price to fall 20 pct.
   
Goldman Sachs also cut its target for Sainsbury to 465 from 613 in the light of yesterday's surprise news.

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Turning to the midcaps, Micro Focus jumped 33 to 327 after reporting it expects first-half revenues of about 107 mln usd, up from 79 mln usd a year earlier, and that it is confident of exceeding its earlier full-year revenue growth forecast.
   
And Minerva continued yesterday's gain, up 5 at 173 on talk that a Saudi-based fund, possibly Saad Investments, had taken advantage of share price weakness to build a stake.
   
On the downside, JD Wetherspoon eased 13 to 488 after issuing a cautious trading statement after the introduction of the smoking ban in England knocked sales.
   
Earlier today, the operator of some 680 managed pubs said uncertainty remained over the impact of the smoking ban, as it unveiled a 1 pct decrease in like-for-like sales for the first quarter.
   
In macro news, retail sales in the UK are growing at an 11-month low rate as higher borrowing costs take their toll, particularly in the clothing sector, the British Retail Consortium revealed today.
   
In its monthly survey of the sector, the BRC said October like-for-like sales, which exclude new stores and space, grew by 1.0 pct from the year before.
   
That's down on the 3.0 pct recorded in September and below the 2.0 pct expected by economists.

UK Diary of Events

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US Summary

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MADRID - Market data at 10.00 am
   
IBEX-35 index  15,929.1, up 103.20 points         

Major gainers:
   
Gas Natural, up 0.84 eur or 2.03 pct at 42.19, after the utility announced bullish guidance for the 2008-2012 period in its strategy presentation and reporting strong nine months earnings.
   
Sogecable, up 0.47 at 28.40, after a Spanish court ruled that Mediapro must pay the broadcaster's Audiovisual Sports for rights to broadcast football league matches.
   
Gamesa up 0.72 eur at 35.58 at following strong third quarter earnings from Danish peer Vestas Wind Systems.
   
Sabadell, up 0.01 at 7.00, after the bank's Investor Day revealed aims for a return on equity of 20.5 pct, annual investment growth of 12 pct and a 500 mln eur rise in profits from ordinary activities by the same date.
   
Heavyweights firmer, with BBVA up 0.14 at 17.34, Telefonica advancing 0.20 to 23.36, and Santander rising 0.11 at 14.64, recovering from yesterday's losses.  
   
Among second-liners, Vueling rose 0.23 eur to 16.80 following strong passenger traffic figure posted after yesterday´s market close and on the back of positive guidance from peer Ryanair.

Major losers:
   
Union Fenosa, down 0.30 at 46.82, after selling 2 pct of Red Electrica de Espana SA at 38.80 eur per share.

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FRANKFURT - Market data at 10.26 am

DAX - up 33.09 points, or 0.42 pct, at 7,840.64
MDAX - up 60.47 points, or 0.59 pct, at 10,320.00
TecDAX - up 14.88 points, or 1.48 pct, at 1,017.51
DAX futures - up 10.50 points, or 0.13 pct, at 7,880.50
   
Major Advancers:
   
Thyssenkrupp, up 1.23 eur, or 2.87 pct, at 44.08, as traders pointed to rising steel prices helping out the steel giant
   
Deutsche Boerse, up 1.86 uer, or 1.62 pct, at 116.37
   
Deutsche Post, up 0.32 eur, or 1.59 pct, on reports the logistics group is considering selling off vacant real estate worth 1-1.5 bln eur
   
Deutsche Telekom, up 0.20 eur, or 1.44 pct, at 14.11
   
BASF, up 0.19 eur, or 1.28 pct, at 94.04

Major Decliners:
   
BMW, down 1.53 eur, or 3.42 pct, at 43.27, as analysts said the automaker's third-quarter numbers were slightly weaker than expected.
   
Metro, down 0.73 eur, or 1.16 pct, at 62.30
   
Merck, down 0.47 eur, or 0.56 pct, at 83.82
   
Bayer, down 0.21 eur, or 0.37 pct, at 56.80, perhaps due to profit-taking after the pharmaceutical and drug giant released third-quarter numbers which were slightly above consensus due to strong results in drug and pesticide sales.
   
Fresenius Medical Care, down 0.10 eur, or 0.29 pct, at 34.83

Other Stocks in Focus
   
MDAX-listed Heidelberger Druck, down 1.89 eur, or 6.91 pct, at 25.47, after the printing machine manufacturer posted disappointing second-quarter earnings, prompting WestLB to cut its price target to 32 eur from 30 eur.
   
TecDAX-listed GPC Biotech, up 0.51 eur, or 15.33 pct, at 3.83, as the top gainer on the index after the pharmaceutical company said that it won a favourable ruling by an arbitration panel, ending a dispute with Spectrum Pharmaceuticals Inc over a co-development and license agreement for cancer drug candidate satraplatin.
   
MDAX-listed Premiere AG were down 0.09 eur, or 0.64 pct, at 13.87, after  investors digested the company's third-quarter results and news that the company will hold off until February to update its 2008 guidance.   
   
MDAX-listed KUKA up 1.92 eur, or 7.35 pct, at 28.06 as the top gainer on the index after the bottling and packaging specialist reported third-quarter numbers that came in far above expectations while it also raised its 2007 operating margin outlook.

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AMSTERDAM - Market data at 10.28 am
   
Major indices
  
AEX                 535.66, up 1.64 points
AMX Midcap          715.58, up 2.90 points
Government bonds    lower

Major gainers
   
Corporate Express gained 2.24 pct to 8.21 eur as investors were pleased with largely in-line underlying third quarter results
   
TomTom added 2.45 pct to 54.30 eur
   
ArcelorMittal rose 2.01 pct to 53.33 eur
   
KPN added 1.56 pct to 12.98 eur
   
Fortis put on 0.55 pct to 19.98 eur following an upgrade to 'buy' from 'hold' at Citigroup
   
DSM added 0.52 pct to 38.45 eur after it said it has increased plastics compounding capacity
   
Ordina rose 1.39 pct to 13.13 eur after reconfirming its outlook late yesterday
   
ASMI added 1.35 pct to 18.80 eur
       
Major decliners
   
ING dropped 0.14 pct to 29.58 eur after buying a US online brokerage for 152 mln eur
   
Reed Elsevier shed 0.69 pct to 12.89 eur
   
Aegon lost 0.73 pct to 13.55 eur
   
ASML shed 0.88 pct to 23.79 eur
   
Boskalis dropped 0.73 pct to 40.65 eur.

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