UK/Euro Financial Market Daily Morning Briefing 08-02-2006

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London shares open lower, US economy fears, oil & metal issues fall

     
London shares opened lower in cautious trade following growing concerns the US economy is showing signs of a slowdown, although slightly better than expected results from several UK industry heavyweights went
some way to settle early nerves, dealers said.
   
At 9.15 am, the FTSE was 49.7 points lower at 5,697.1 while the broader indices were also weaker in early deals. Early volume was moderate with 363 mln shares traded in 36,879 deals.
   
Last night on Wall Street, the DJIA closed lower, with the Nasdaq Composite
falling for a fourth consecutive session, as a warning from homebuilder Toll
Brothers raised concern the housing market, one of the main drivers of the
economy, may be cooling off.
   
The Dow Jones Industrial Average ended down 48.51 points at 10,749.76.
   
The Nasdaq Composite Index fell 13.84 points to 2,244.96, while the S&P 500
Index dropped 10.24 points to 1,254.78.
   
Over in Asia, the jitters on wall Street impacted on the Japanese market
where the Nikkei 225 finished 2.7 pct down at 16,272.68. The Topix fell 2.5 pct
to 1,671.39. In Hong Kong, the Hang Seng ended the morning session 125.20 points lower at 15,391.81.
   
In London, the overnight fall in base metal prices, together with a 3.1 pct
drop in oil prices and the biggest one-day price fall in 12 years for gold, led
to a sizeable sell-off for index-leading resources stocks.
   
Antofagasta led the FTSE 100 fallers, off 99 pence at 1981, with BHP down
40 at 973 and Rio Tinto 122 at 2733.
   
Elsewhere, Anglo American fell 79 at 2008, hit by a combination of a
downgrade by Citigroup to 'hold' from 'buy' and a pull back in metal prices
overnight.
   
Citigroup pointed out that Anglo American's share price has appreciated by
around 40 pct since September 2005 and the shares have now reached the broker's target price of 2,100 pence.

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RD Shell topped oil losers, off 39 at 1874, with BP continuing yesterday's
fall following disappointing full year results, down 11 at 636.
   
Oil prices fell through the key 63 usd support level in Asian trading as
geopolitical concerns faded.
   
In Singapore, New York's main contract, light sweet crude for delivery in
March, was down 0.23 usd at 62.86 usd a barrel after skidding 2.02 usd to close
at 63.00 usd a barrel in the US overnight.
    
Smiths Group fell 5 pence to 946-1/2 after Citigroup downgraded the
aerospace and defence company to 'hold' from 'buy' following last week's trading
statement.
   
While the broker noted Smiths' trading update was in line with expectations from a revenue growth perspective, it pointed out that static overall margins demonstrated a lack of profit leverage.
   
Among shares bucking this morning's negative trend, BAA rose 14 pence to 669
after rumours circulated of a possible bid from either Australian finance institution Macquarie or Germany's Fraport according to dealers.
   
Rentokil Initial was trading at 158 after UK support services group confirmed it is mulling the sale of its Manned Guarding division, which provides traditional guarding duties, CCTV operation and mobile patrolling.
   
Telecos again rose as sector consolidation gave an impetus to leading
issues. BT rose 1-1/4 to 214-3/4, with Vodafone up 1 at 116-3/4.
   
Among companies reporting interims and full year trading results, detergent
group Reckitt Benckiser rose 10 to 1945 after it revealed profits rose 12 pct in
2005 to 840 mln stg after a very strong fourth quarter that saw underlying
profits rise by 20 pct.
   
In response, WestLB reiterated its 'add' recommendation and said Reckitt
delivered very impressive results, with top line growth of 5 pct, gross and EBIT
margin improvement, strong cash flow and a 17 pct increase in the final
dividend.
   
Meanwhile, Scottish Power eased 4-1/2 to 578 as profits for the nine months
to December rose by 42 pct to 470 mln stg. The third quarter dividend rises by 5
pct.
   
Dresdner Kleinwort Wasserstein reiterated its 'add' advice and said although
investor focus remains on the scope for new corporate action, the utility had
delivered a solid set of results.
   

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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 

Amsterdam

AMSTERDAM - Market data at 09.24 GMT

   
Major indices
   
AEX Index           449.26, down 3.70 points
AMX Midcap index    567.40, down 2.17 points    
Government bonds    Flat to lower

   
Major losers
   

Oil stocks led the move into negative territory amid dropping oil futures. Royal Dutch Shell dropped 2.36 pct to 26.10 eur, SBM Offshore lost 2.22 pct to 79.10 eur and second-liner Fugro lost 2.32 pct to 29.87 eur.
   
Buhrmann shed 1.54 pct to 13.44 eur a day ahead of results.
   
Wolters Kluwer lost 1.04 pct to 18.06 eur.
   
Financials also lost across the board. ING shed 0.94 pct to 29.60 eur, Fortis lost 0.80 pct tp 28.67 eur, Aegon dropped 0.76 pct to 13.05 eur and ABN Amro shed 0.51 pct to 23.40 eur.
   
DSM dropped 0.83 pct to 37.20 eur after announcing a 10 mln eur investment
in a new factory in China.
   
Versatel traded flat at 0.94 eur, off earlier lows after the company's CFO
announced his resignation.
   
   
Major gainers
   

Vedior gained 0.65 pct to 15.40 eur
   
KPN added 0.60 pct to 8.33 eur after a price target hike at Petercam.
   
Akzo Nobel edged up 0.07 pct to 42.75 eur after a series of price target
raises at several brokerages.
   
Second-liner Air France-KLM added 1.36 pct to 19.41 eur after a ratings
change to 'overweight' from 'equalweight' at Morgan Stanley

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FRANKFURT - Market data at 09.01 GMT

   
Major indices:
   

DAX 30 - 5,621.72, down 51.20 points or 0.90 pct
MDAX - 7,987.55, down 102.82 points or 1.27 pct
TecDAX - 638.67, down 9.41 points or 1.26 pct
DAX future - 5,624.50, down 65.0 points or 1.14 pct

    
Major Gainers
   

Deutsche Telekom, up 0.15 eur or 1.15 pct at 13.23

TUI, down 0.09 eur or 0.52 pct at 17.17

Metro, down 0.25 eur or 0.60 pct at 41.68

BASF, down 0.40 eur or 0.62 pct at 64.08

Munich Re, down 0.71 eur or 0.64 pct at 109.74
    

Major losers:
   

ThyssenKrupp, down 0.50 eur or 2.47 pct at 19.73

Hypo Real Estate, down 1.27 eur or 2.38 pct at 52.06

Continental, down 1.63 eur or 1.98 pct at 80.51

VW, down 0.96 eur or 1.91 pct at 49.35

Adidas-Salomon, down 2.51 eur or 1.48 pct at 167.40

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