UK/Euro Financial Market Daily Morning Briefing – UK/Euro Financial Market Daily Morning Briefing
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A daily snapshot of the UK, French, German and Dutch markets just after the market open. Including a diary of key financial events across the UK and a summary of U.S after market close. Click here to receive or daily bulletins. News provided by AFX/Associated Press.
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UK/Euro Financial Market Daily Morning Briefing 07-02-2006
02/07/2006
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ADVFN III |
Morning Euro Markets Bulletin |
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Daily world financial news from AFX/Marketwatch |
Supplied by advfn.com | | |
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London
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London shares weak at open, as BP disappointment offsets good Aviva figs
The FTSE 100 edged lower in early deals, hit by weaker-than-expected earnings from BP, though M&A excitement in the telecom sector together with strong results from Aviva helped provide some support, traders said. At 9.00 am, the FTSE 100 was down 0.8 at 5,771.8, having closed up 13.1 points yesterday at 5,772.4. The broader indices were higher. Volume was solid, with 399 mln shares changing hands in 28,175 deals. In New York last night, the major indices ended the session mixed, with the DJIA rising 4.65 points to 10,798.27, the S&P 500 up 0.99 at 1,265.02, while the Nasdaq Composite fell 3.78 points to 2,258.80. On the downside, political tensions heightened in the Middle East, pushing crude prices higher. On the upside meanwhile, Alcoa shares rose to an 11-month high after JP Morgan said the company's earnings will benefit from surging aluminium prices and upgraded the stock to 'overweight'. After the closing bell Walt Disney shares rose on the back of better than expected earnings in the fourth quarter. General Motors stock was also higher after the company gave its biggest shareholder a voice on its board of directors. Jerry York, who works closely with Kirk Kerkorian at the billionaire investor's Tracinda Corp, will hold a seat on the board. In Asia, the Hang Seng index closed the morning down 68.68 points at 15,479.38, while the Nikkei 225 ended the day down 26 points at 16,720.99. Back in London, BP shares fell 17 pence to 648-1/2 after the oil giant reported a disappointing set of fourth-quarter earnings. Clean earnings for the quarter at 4.895 bln usd were well below the forecast range of 5.4-6.0 bln usd. "The main miss appears to be in refining and marketing," said a dealer at a major US brokerage.
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"And the reserve replacement ratio at 100 pct is also disappointing. We had been looking for a ratio of 110 pct." Oil prices pulled back this morning, with March-dated Brent futures trading down 0.32 usd at 64.79 usd a barrel. Retail stocks were also under pressure as a leading retail lobby group warned that the sharp pick-up in UK retail sales over Christmas came to an abrupt halt during January. In its monthly survey, the British Retail Consortium said like-for-like sales increased by only 0.2 pct from January 2005 against expectations of a 1.5 pct improvement. January's modest increase represents a sharp slowdown from the equivalent 2.6 pct rise recorded in December, and equates to the weakest start to the year since the survey began in 1995. Next fell 23 pence to 1,685, DSG International lost 2-1/52 pence to 173-1/4 and GUS was off 7-1/2 pence at 1,059. Aerospace and defence stocks suffered, with Rolls Royce down 3 at 440-1/4 and Smiths Group dropped 12 to 956-1/2. Last night, the White House requested almost 440 bln usd for the Pentagon's budget next year, almost 10 pct above the 2005 level. However, the Financial Times reported today that The White House has cancelled an alternate engine for the 240 bln usd Joint Strike Fighter that would have been built, in part, by Rolls Royce. Meanwhile, UBS downgraded Smiths Group to 'reduce' from 'neutral', cutting its target price to 900 pence from 1,070. The rating cut is based on significant concerns over the performance of Smiths' Aerospace division and continuing worries over the strategic direction of the Medical division, explained UBS. Compass Group was another casualty this morning after the Daily Telegraph reported hopes that the catering company had put its involvement in a United Nations procurement scandal behind it have been shattered by the US House of Representatives, which has refused to accept the findings of the company's own internal investigation into the matter. Compass fell 2 pence to 219-3/4. On a more positive note, Aviva gained 15-1/2 pence to 743 after the UK's biggest insurer posted solid full-year sales, buoyed by a continued strong performance in continental Europe, and signs of faster growth in its domestic market.
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In response, Merrill Lynch reiterated its 'buy' advice and said the UK sales performance was at the top of expectations. Amvescap, which reports full year results at midday, gained 6-3/4 pence to 514-1/4. Meanwhile, shares in Yell Group rose 3-1/2 pence to 545-1/4 after the UK directories group reported solid third-quarter results and said it was on track to meet full-year expectations. In response, Merrill Lynch reiterated its 'buy' advice and raised its price objective to 605 pence. Merrill said the Yell investment case remains compelling as the company remains one of the highest quality organic growth stories in the sector, yet trades on an undemanding valuation. Peer Prudential was up 6 pence at 573. Telecom stocks were buoyed by ongoing sector consolidation hopes, with Cable & Wireless up 1 at 102-1/4, BT up 1-3/4 at 209 and Vodafone up 1 at 117. Portugal Telecom jumped 20 pct this morning after Sonae launched an audacious 10.7 bln eur bid for the group at 9.50 eur per share, 16 pct above PT's closing price last night and valuing the target at more than four times Sonae's own market capitalisation. WestLB noted that Sonae's offer is the equivalent of C&W bidding for BT, or Arcor bidding for Deutsche Telecom, except that Sonae, in addition to being the key competitor to PT is also a large conglomerate with enough fire power to pull it off. The Guardian reported speculation that C&W is being targeted by Orascom, the Egyptian telecoms business that owns Italian mobile phone operator Wind. Mining stocks were another positive feature after Anglo American said it is to spend 6.1 bln usd expanding platinum mines in South Africa. Traders noted Anglo is bullish on metal prices going forward and has said that all the indications are that the current cycle is going to be in place for a lot longer than people estimate. Anglo rose 7 to 2,155 , Xstrata was up 20 pence at 1,621 and Rio Tinto gained 31 to 2,924.
On the second line, Corus moved up 1 at 74-3/4 after US Steel rallied 6 pct last night amid speculation that Arcelor may launch a takeover bid. Arcelor is attempting to thwart a hostile bid from Mittal Steel for the Luxembourg-based steel group. Among the midcap fallers, easyJet lost 5 pence to 377 as January traffic figures disappointment. Passenger numbers rose 11.2 pct versus the consensus forecast of 13 pct. Finally, Computacenter fell 9-1/4 pence to 278-3/4 as Deutsche Bank downgraded the stock to 'hold' from 'buy' at Deutsche Bank on valuation grounds.
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Diary of Events
For a look at key financial events in the UK today, click here
US Summary
For a summary of US stocks at the close of trade, click here
Paris
Paris shares at a glance outlook
Shares are expected to open higher, following modest gains on Wall Street overnight, dealers said. On Monday the CAC-40 closed down 0.06 pct or 2.97 eur at 4,934.59 Among CAC-40 stocks 19 closed lower and 21 closed up.Volume for the day was 4.41 bln eur On the Matif, CAC-40 futures were trading 12.5 points higher at 4,950.0
TODAY Avenir Telecom Q2 sales Nexity Q4 sales Publicis FY sales, after close December budget data, 8.45 am
TOMORROW Pages Jaunes FY results, before open Peugeot FY results, before open Lagardere Q4 sales, after close; board meeting
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Frankfurt
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German shares at a glance outlook
German shares are seen opening modestly higher after the DJIA closed up 0.04 pct yesterday and merger speculation pushes steel issues up, dealers said. Brokerage Lang & Schwarz said the DAX 30 index is expected to open at about 5,679.00, up from Monday's close of 5,666.78.
FORTHCOMING EVENTS
TODAY
O2 Germany press conference on CeBIT 2006 preview in Hamburg (9.00 am)
Banking World 2006 conference in Frankfurt (day 2)
TOMORROW
Banking World 2006 workshops in Frankfurt First day of 2-day Symposium on Sparkassen savings banks and state-owned Landesbanken; Bundesbank board member Edgar Meister, DekaBank CEO Franz Waas, BayernLB CEO Werner Schmidt, HSH Nordbank CEO Alexander Stuhlmann et al to speak Allianz EGM to finalise merger with RAS
Douglas Q1 German Dec, FY current account/trade (0700) German Jan crude steel output (0700) Bundesbank board member Edgar Meister to speak on banking supervision, Berlin (0845)
Forex
London 0909 GMT |
Singapore 0719 GMT |
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US dollar |
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yen 118.15 |
down from |
118.89 |
sfr 1.2991 |
down from |
1.3008 |
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Euro |
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usd 1.1991 |
up from |
1.1975 |
stg 0.6858 |
up from |
0.6848 |
yen 141.66 |
down from |
142.38 |
sfr 1.5575 |
down from |
1.5578 |
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Sterling |
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usd 1.7483 |
up from |
1.7482 |
yen 206.60 |
down from |
207.82 |
sfr 2.2707 |
down from |
2.2738 |
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Australian dollar |
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usd 0.7426 |
up from |
0.7425 |
stg 0.4247 |
up from |
0.4246 |
yen 87.74 |
down from |
88.28 |
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