UK/Euro Financial Market Daily Morning Briefing 08-09-2006

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London shares show early strength, technical bounce after recent falls

The FTSE 100 was firmer in early deals, recovering a little of the ground lost during the previous three sessions, although with limited corporate or economic newsflow around dealers said early trading was being driven by technical factors.
   
At 9.00 am, the FTSE 100 was up 23.7 points at 5,881.8, while the broader FTSE 250 was up 43.4 points at 9,619.5. The other UK indices were also better.
   
Dealers said that the market was gaining strength after technical support levels held yesterday.
   
Last night on Wall Street, US stocks fell for the second straight day after warnings from several homebuilders raised investors' concerns about an economic slowdown and comments about inflation from San Francisco Federal Reserve President Janet Yellen offered investors little comfort.
   
By the close, the DJIA fell 74.76 to 11,331.44, with the Nasdaq dipping 12.55 to 2,155.29 after posting its largest single-day point drop in more than a month on Wednesday, and the Standard & Poor's 500 index was off 6.24 at 1,294.02.
   
Over in Asia, the Nikkei 225 index in Tokyo ended up 68.05 points at 16,080.46 after the Bank of Japan opted to leave interest rates unchanged, while the Hang Seng ended its morning session up 69.90 points at 17,166.34.
   
Oil prices continued to fall back as supply concerns eased after the US government reported an unexpected rise in gasoline stocks.
   
New York's main contract, light sweet crude for October delivery, was down 34 cents at 66.98 usd a barrel from its close of 67.32 usd in US trading overnight. Brent North Sea crude for October shed 35 cents to 66.18 usd.
   
Among UK listed shares on the move this morning, Standard Chartered gained in early deals following an upbeat research note from Credit Suisse, which reiterated its 'outperform' rating within an 'overweight' industry weighting.
  
The shares were 20 pence higher at 1,321.

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The broker said it is becoming increasingly confident in the prospect for accelerated growth at Standard Chartered's consumer businesses and the bank's ability to absorb regional shocks, given greater diversification of its businesses.
   
Prudential featured among the early risers, up 5 pence at 582 1/2, after Merrill Lynch upgraded its stance to 'buy' from 'neutral' on valuation grounds.
   
Yell also gained, up 6 pence at 578 after both UBS and Morgan Stanley raised their price targets for the publishing group.
   
UBS said the Competition Commission report proposing remedies for the investigation into the UK print directories market was positive for Yell and upped its target to 530 pence from 480.
   
Morgan Stanley upped its target to 625 pence from 570.
   
Meanwhile on the downside, Kingfisher fell 0 3/4 to 236 1/4 after the FT reported that US listed Home Depot will not be pursuing its interest in the UK home improvements retailer citing Home Depot's CEO who says his company's focus is China and North and Central America.
  
Elsewhere, AstraZeneca slipped to the bottom of the index after being downgraded to 'hold' from 'buy' by Citigroup on valuation grounds.
   
The broker said the strong share price rise in the last two months has stretched the valuation to a point where reward and risk are more evenly balanced and which offers limited upside, and increased its price target to 68 usd from 66 usd.
   
On the second line, insurer Catlin Group paced the FTSE 250 risers after it delivered pretax profits of 139.1 mln usd today, down from 147.9 mln in the first half of 2005, and after the company said that it reduced its exposure to natural catastrophes by one-third.
   
Elsewhere, shares in JD Wetherspoon were firmer in opening deals as the market welcomed a set of 'consensus-beating' full year numbers.
   
The pub operator added 7 pence to 451 3/4.

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It reported full-year pretax profit of 58.4 mln stg, up from 47.2 mln stg the previous year, while saying it has enjoyed an "encouraging start" to the new financial year.
   
Analysts' expectations had ranged between 55.6-57 mln stg.
   
Reacting to the numbers, Altium Securities said the figures were 'slightly ahead of expectations', with operating margins of 9.9 pct compared with 8.8 pct in the previous year helped by good cost control.
   
However, on the downside, shares in AGA Foodservice slipped to the bottom of the FTSE 250 post results as in line figures failed to impress investors, prompting Altium Securities to reiterate the stock as 'reduce'.
   
Shares fell 20 pence to 352, after the company said first half pretax profits rose 11.1 pct year on year to 20 mln stg on the back of strength in its UK and European food and bakery operations.

UK Diary of Events

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

US Summary

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PARIS - Market data at 10.03 am:

Major indices:
   
CAC-40 up 14.71 points or 0.29 pct at 5,074.80
SBF-80 up 14.91 points or 0.26 pct at 5,737.32
SBF-120 up 10.41 points or 0.28 pct at 3,671.29

Volume: 453 mln eur
28 CAC-40 stocks up
10 CAC-40 stocks down
1 CAC-40 stock unchanged
The index has 39 stocks ahead of ArcelorMittal's entry

Major gainers:
   
Accor, up 1.04 eur or 2.13 pct at 49.89, after an upgrade by Deutsche Bank to 'buy' from 'hold'.
   
L'Oreal, up 0.90 eur or 1.15 pct at 79.10
   
Danone, up 1.20 eur or 1.14 pct at 106.90. Yesterday it announced the acquisition of a major dairy company in the fast-growing Ukrainian market.

Major losers:
   
Club Mediterranee, down 1.51 eur or 3.41 pct at 42.79, after third quarter sales missed expectations.
   
Capgemini, down 0.66 eur or 1.58 pct at 41.13, after a downgrade to 'underweight' from 'overweight' by JP Morgan.
   
Pernod Ricard, down 1.10 eur or 0.65 pct at 168.80
   
Sanofi-Aventis, down 0.40 eur or 0.59 pct at 67.95, after Apotex appealed a US court decision blocking sales of its competitor to Sanofi-Aventis's blockbuster drug Plavix.

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FRANKFURT - Market data at 9.36 am

Major indices:
   
DAX 30 - 5,780.16, up 6.44 points or 0.11 pct
MDAX - 8,112.42, up 40.02 points or 0.50 pct
TecDAX - 637.41, up 2.65 points or 0.42 pct
DAX future - 5,784.00, up 1.00 points or 0.02 pct

Major gainers:
   
Deutsche Telekom, up 0.11 eur or 0.98 pct at 11.30, after Financial Times Deutschland reported that the German telecoms giant plans to save around 5 bln eur by 2010 as part a wide-reaching cost-cutting programme
   
BASF, up 0.57 eur or 0.91 pct at 63.45, as Citigroup upgraded its stance on the stock to 'hold' from 'sell' and raised its price target to 63 eur from 58
   
Allianz, up 0.98 eur or 0.75 pct at 131.78
   
Continental AG, up 0.58 eur or 0.74 pct at 79.42, bouncing back from recent losses
   
Munich Re, up 0.66 eur or 0.57 pct at 116.56

Major losers:
   
Metro, down 1.40 eur or 3.11 pct at 43.63, on news JP Morgan is placing 17.5 mln shares, or 5.39 pct of the share capital, in the German retailer on behalf of Suprapart AG in an accelerated bookbuilding offering, details of which were released last night
   
Altana, down 0.29 eur or 0.62 pct at 46.46, after the Frankfurter Allgemeine Zeitung reported that the company might get less for its pharmaceutical unit than the 5-6 bln eur expected by analysts
   
DaimlerChrysler, down 0.19 eur or 0.47 pct at 40.00, as Goldman Sachs reiterated its 'conviction sell' rating and 38 eur price target on the German automaker, on the back of concerns over the future profitability of Chrysler
   
BMW, down 0.14 eur or 0.36 pct at 38.83
   
Siemens, down 0.21 eur or 0.32 pct at 65.70

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