UK/Euro Financial Market Daily Morning Briefing 07-04-2006

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London shares open higher, eyes on US jobs data; BAE dips on Airbus news

Leading shares opened higher this morning, although dealers expected markets to remain rangebound ahead of crucial US jobs data due later in the session, while BAE fell after confirming it is in talks to sell its 20 pct stake in Airbus to EADS, dealers said.
   
At 9.00 am, the FTSE 100 was up 13.6 points at 6,059.3.
   
Early volume was low with 191 mln shares traded in 25,758 deals.
   
Last night on Wall Street, the Dow Jones Industrial Average was down 23.05 points at 11,216.50 amid some nervousness ahead of the upcoming release of the March employment report.
   
A rise in long-term interest rates and some concern over the inflationary impact of a surge in commodity prices also weighed on sentiment.
   
In Asia, Japan's Nikkei 225 index closed up 74.04 points at 17,563.37, while over in Hong Kong the Hang Seng index closed the morning session down  29.35 points at 16,381.78.
   
With little significant newsflow this morning it was BAE Systems which occupied market attention, with the stock falling back 2-1/2 pence to 428-1/2 as investors digested confirmation the defence group is in talks to sell its 20 pct stake in Airbus to EADS.
   
"Discussions are at an early stage and a further announcement will be made if and when appropriate," the UK defence company said.

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In response, Merrill Lynch said it believes the value of the stake is between 2.8 and 3.3 bln stg on a fundamental basis, but the control premium could push the sale price higher.
   
However, on the upside, Shire rose 7 pence to 879 after the US Food and Drug Administration approved Daytrana, a patch to treat attention deficit hyperactivity disorder.
   
In response, JP Morgan reiterated its overweight stance and said it expects the stock to react positively to the news.
   
Elsewhere, British Energy continued to rise, up 7 pence to 700, as investors speculated on the prospects for further significant increases in the price for CO2 emissions in the European Trading Scheme this year.
   
Yesterday Deutsche Bank noted that the trigger for the recent share price rise may be the fact that all installations covered by the ETS have to submit one permit for every tonne of CO2 they emitted in 2005 by April 30.
   
Deutsche maintained its 'buy' rating on the stock.
   
Barclays was also another early riser, up 7-1/2 pence to 693-1/2, on persistent rumours the UK retail bank could be the subject of a takeover.
   
Vodafone continued yesterday's rise, up a further 1 penny to 125-1/4, with investors encouraged by reports in the press that said major shareholders are confident that CEO Arun Sarin will be able to prove that his plans to move into the fixed-line and broadband markets can pay off.
   
On the downside, Yell Group fell 7-1/2 pence to 534 in a cautious response to a report in a Spanish newspaper that the British telephone directories publisher and a private equity consortium are the two finalists in the bid for Telefonica SA's 59.9 pct stake in its yellow pages unit Telefonica Publicidad e Informacion SA.

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According to El Pais, which broke the story, the deadline for final offers is April 21.
   
On the second line, Burren Energy rose 15-1/2 pence to 968 after the shares were initiated with a 'buy' rating at Citigroup with a 1,165 price target.
   
The broker said that this year Burren has twenty exploration wells planned, the prospectivity of newly acquired acreage was being assessed, and acquisitions of development-stage opportunities were possible.
   
Meanwhile on the downside, Isoft continued to lag the markets after falling sharply yesterday on rumours of an impending profit warning.
   
In reaction, Bridgewell Securities this morning said that the shares could  continue to come under pressure despite the company's reiteration of guidance late yesterday.

U.S. Summary

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Diary of Events

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

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AMSTERDAM - Market data at 08.48 BST

Major indices:

AEX index             470.78, up 1.18 point
AMX Midcap index      636.98, up 3.20 points
Government bonds      broadly higher
  
Major gainers:
   
Vedior outperformed the market, jumping 4.45 pct to 17.36, helped by an upgrade to 'buy' from 'hold' at Citigroup with a raised price target of 19 eur from 16. Analysts were also positive on news Vedior upped its stake in UK recruitment firm Blomfield to 70 pct.
   
Fellow staffing group Randstad advanced 3.95 pct to 53.90
   
SBM Offshore gained 1.81 pct at 84.60 amid reports it is close to winning new orders from Chevron and Shell
   
Rodamco Europe firmed 2.11 pct at 91.90 while Hagemeyer put on 1.46 pct at 4.17, extending yesterday's gains after Fortis raised the stock to 'buy' from 'hold'
   
VNU traded 0.98 pct higher at 27.70 after activist shareholder Eric Knight detailed his proposals for VNU should its agreed 7.5 bln eur takeover by private-equity consortium Valcon fail, telling other shareholders they stand to make much more money if they oppose the sale and restructure VNU themselves
  
Univar firmed 0.51 pct at 43.64 after announcing the acquisition of Spanish chemicals distributor JSM Chemicals
   
Major losers:
   
ASML dropped 0.58 pct at 17.18 after yesterday's strong gains
   
Heavyweight financials all traded in the red. ING eased 0.34 pct at 31.88, Fortis gave up 0.24 pct at 29.23, ABN Amro was off 0.12 pct at 24.95 and Aegon slipped 0.14 pct at 14.79
   
Van der Moolen lost 10 cents or 1.32 pct at 7.47, trading ex-dividend of 2 cents 

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PARIS - Market data at 09.01 BST

Major indices:
   
CAC-40 up 7.99 points at 5,230.35
SBF-80 up 16.53 at 6,157.74
SBF-120 up 7.27 at 3,807.82

Volume: 514 mln eur
18 CAC-40 stocks up
20 CAC-40 stocks down
2 unchanged

Major gainers:
   
Rhodia, up 0.07 eur or 3.2 pct at 2.28, approaching its highest trading levels since Dec 2003.
   
EADS, up 0.16 eur at 32.34 and rebounding from declines seen earlier this week, after BAE Systems confirmed entering talks to sell its 20 pct stake in Airbus to EADS, which would give it full control of the company ahead of the expected growth of civilian aircraft sales in coming years, dealers said.
   
Vallourec, up 17.50 or 1.9 pct at 930 and adding to yesterday's nearly 9 pct surge, seen amid rumours that the speciality tubes maker could become a bid target for Exxon Mobil, dealers said.

Major losers:
   
Haulotte, down 0.70 at 23.90 and continuing to slide on profit-taking after shares in the aerial platforms group hit a 5-year high earlier this week, seen in the wake of 2005 earnings.
   
Eiffage, down 1.90 or 1.5 pct at 129.50 and adding to yesterday's 9.5 pct drop as investors discount the chances for any full takeover bid from Spain's Sacyr Vallehermoso, which has acquired nearly 31 pct of the company.
   
Klepierre, down 1.10 at 104.90; Unibail, down 0.90 at 153.20 and Gecina, down 0.50 at 112.50 -- all three property stocks were downgraded to 'neutral' from 'buy' by Merrill Lynch analysts today. 

Frankfurt

FRANKFURT - market data at 08.18 BST

Major indices:
   
DAX 30 - 6,035.86, up 4.47 points or 0.07 pct
MDAX - 8,744.21, up 17.93 points or 0.21 pct
TecDAX - 730.42, up 2.10 points or 0.29 pct
DAX future - 6,066.50, up 6.00 points or 0.10 pct

Major gainers:
   
ThyssenKrupp, up 0.65 eur or 2.72 pct at 24.56, as Credit Suisse hiked its price target on the issue to 31 eur from 26 and reiterated its 'overweight' recommendation
   
SAP, up 4.23 eur or 2.30 pct to 188.50, extending yesterday's solid gains in as Deutsche Bank lifted its price target on the stock to 230 eur from 190 and reiterated its 'buy' rating, shrugging off a downgrade to 'hold' from 'buy' with a 200 eur price target at Citigroup

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Linde, up 0.31 eur or 0.46 pct at 68.08

Infineon, up 0.03 eur or 0.34 pct at 8.79

Deutsche Post, up 0.07 eur or 0.33 pct at 21.06 Major losers: BMW, down 0.40 eur or 0.88 pct at 44.89

Metro, down 0.34 eur or 0.77 pct at 43.70

DaimlerChrysler, down 0.30 eur or 0.63 pct at 47.65

Deutsche Boerse, down 0.56 eur or 0.49 pct at 113.89

BASF, down 0.21 eur or 0.33 pct at 64.27

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