UK/Euro Financial Market Daily Morning Briefing 10-03-2006

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Leading shares fell back in early in deals, mirroring weakness on Wall Street last night, and as miners were hit by a broker downgrade to Anglo-American, dealers said.

At 9.00 am, the FTSE 100 index was 4 points lower at 5,851.9, mirroring the
weaker broader indices.

Meanwhile, US stocks ended lower as concern over the impact of higher
interest rates continued to dog the market, with nervousness ahead of the
release of the February employment report also keeping some buyers on the
sidelines.

The Dow Jones Industrial Average ended down 33.46 points at 10,972.28.
The Nasdaq Composite Index fell 17.74 points to 2,254. The tech-rich index
has now ended lower for the sixth consecutive session although it only put in a
fractional loss on Wednesday.

The S&P 500 Index dropped 6.24 points to 1,272.23.
And today, all eyes will be on the non-farm payrolls data for February with
the market looking for a rise of 206,000, following on from a 193,000 gain in
January.

It is the final employment report before the March 27 and 28 meeting of the
Federal Open Market Committee, where Fed officials are widely expected to raise
overnight interest rates to 4.75 pct.

Across Asia overnight, the Nikkei 225 index closed up 409.42 points at
16,036.91 while the Hang Seng began its afternoon session up 17.04 points at 15,510.13.

Still in Asia, oil prices strengthened after losing some 6 pct of their
value this week, as market attention returned to the escalating Iranian nuclear
crisis, with the OPEC production meeting and weekly US inventories out of the
way.

Earlier this morning, April-dated US light crude futures were up 43 cents at
60.45 usd, after plummeting 1.56 usd yesterday to close at 60.02 usd, while
April-dated Brent contracts were up 94 cents at 60.97 usd.

Back in London, Anglo American was the top faller, 37 pence lower at 1935
after Morgan Stanley downgraded the diversified miner to 'underweight' from
'overweight'.

Morgan Stanley said Anglo American shares have re-rated over the past year,
driven by restructuring, the return of cash to shareholders, and generating
growth both organically and through acquisition.

However, it said details from the 2005 results suggest management has lost
the momentum and that 'new Anglo' is going to look "disappointingly similar to
the old".

The US broker has reduced its 2006 EPS forecast to 2.75 usd from 3.35 usd
previously, while the 2007 forecast has been cut to 2.71 usd from 3.19 usd
before and the 2008 forecast has been lowered to 2.28 usd from 2.47 usd
previously.

Peers, Rio Tinto were off 30 at 2593, Xstrata was down 18 at 1645, and
Antofagasta also lost 18 at 1956.

SABMiller was another casualty after Deutsche Bank lowered its 2006 and 2007
EPS by 3-4 pct to reflect beer volumes being held back by continued poor
weather, an adjustment to Bavaria depreciation charge and the incorporation of
IFRS stock option expenses.

Shares in SABMiller were off 10 at 1105.
In contrast, BAA took on 14 at 789 on continued hopes Spain's Ferrovial is
poised to make a bid for the airport operator.

On the second-line, CLS was the top performer, after the group posted a full
year pretax profit of 84.7 mln stg, up from 60 mln previously.

Earnings also boosted insurer Amlin after the group reported a 42 pct rise
in full year profit, with strong underwriting profits and diverse services
outweighing an unprecedented 130 mln loss from hurricanes.

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Amlin, one of the largest independent insurers in the Lloyd's of London
insurance market, said pretax profit for the year to Dec 31 rose to 182.7 mln
stg, ahead of previous guidance of 175 mln stg, and up from 128.9 mln a year
earlier.

On the downside, Greggs lost over 10 pct as the UK's biggest high street
baker reported a 5 pct rise in 2005 profit but warned that earnings will likely
fall this year as it struggles to pass on higher energy costs in the face of
sluggish consumer spending.

The company, which runs 1,319 shops under the Greggs and Bakers Oven brands,
said pretax profit rose to 50.2 mln stg from 47.8 mln on turnover up 6 pct to
533 mln. Analysts had forecast profit of around 48.5 mln stg.

Fellow faller Rank slipped 7 at 229 after it was downgraded to 'sell' from
'hold' at Merrill Lynch.

In the absence of a bid materialising for the group, the US broker sees
potential downside to 180 pence per share.

Marshalls was off 5 at 324 after the landscape products group specialist
said operating profit rose by 1 pct before works closure costs of 3 mln stg,
adding that market conditions in 2005 were more difficult than they have been
for a number of years.

In a statement, CEO Graham Holden said: "Marshalls continues to develop its
integrated offer for the Public Sector and Commercial market and its consumer
initiatives for the Domestic market, as well as continually reviewing its cost
base.

On the upside, IP Live PLC took on 8 pence at 68 after the group said
occupancy levels at "Billy Elliot the Musical" have been ahead of expectations
resulting in a higher level of income from the show.

Consequently, the group's results for the year ending March 31 2006 will
significantly exceed market expectations, it said.

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Frankfurt

German shares AFX market data at 9.56 am

Major indices:
DAX 30 - 5,717.60, down 14.62 points or 0.26 pct
MDAX - 8,286.44, down 1.99 points or 0.02 pct
TecDAX - 719.07, up 0.64 point or 0.09 pct
DAX future - 5,718.00, up 13.00 points or 0.23 pct

Major risers:
-ThyssenKrupp, up 0.24 eur or 1.12 pct at 21.68, as exchange newsletter Der Platow Brief reported that MDAX-listed peer Salzgitter's full-year results on Monday will beat already optimistic market expectations. Salzgitter was up 0.94
eur or 1.57 pct at 60.86
-Deutsche Bank, up 0.63 eur or 0.70 pct at 90.88
-Fresenius Medical Care, up 0.63 eur or 0.68 pct at 92.93
-Metro, up 0.25 eur or 0.56 pct at 45.00
-Altana, up 0.25 eur or 0.55 pct at 45.85, as sources said it is to propose
at its AGM a full year dividend at between 1.04 eur per share and 1.05 eur per
share compared with the 0.95 eur paid for business year 2004

Major fallers:
-RWE, down 0.77 eur or 1.11 pct at 68.56
-BASF, down 0.42 eur or 0.67 pct at 62.10   
-Siemens, down 0.50 eur or 0.66 pct at 75.49
-Infineon, down 0.05 eur or 0.63 pct at 7.91
-Bayer, down 0.19 eur or 0.58 pct at 32.32

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Paris shares AFX market data at 10.15 am.

PARIS - Market data at 10.15 am:

Major indices:
CAC-40 down 3.78 points or 0.08 pct at 5,004.06
SBF-80 down 7.95 points or 0.14 pct aty 5,702.24
SBF-120 down 2.83 points or 0.08 pct at 3,625.13

Volume: 684 mln eur
9 CAC-40 stocks up
31 CAC-40 stocks down

Major losers:
-EDF, down 0.53 eur or 1.28 pct at 41.00
-Accor, down 0.57 eur or 1.19 pct at 47.38, after news that it has acquired
US-based Commuter Check Services for an undisclosed sum.
-Thales, down 0.39 eur or 1.29 pct at 37.51, after reporting full year
numbers that only beat expectations thanks to a favourable tax rate, dealers
said.

-Rhodia, down 0.06 eur or 2.70 pct 2.16 after being downgraded to 'sell' from
'hold' with an increased target price of 180 eur, by Citigroup.

Major gainers:
-Societe Generale, up 2.10 eur or 1.83 pct at 116.60 after a report in Le
Nouvel Observateur that Citigroup may be mulling a takeover bid for it
-PPR, up 1.10 eur or 1.17 pct at 95.45, after an upgrade to 'overweight'
from 'neutral' by JPMorgan on the back of positive full year results, dealers
said.

Most active stocks:
-Carrefour, up 0.86 eur or 2.03 pct at 43.17 in 81.75 mln eur, after saying it expects a 10 pct increase for both sales and operating profit by 2008.
-BNP Paribas, down 0.30 eur or 0.41 pct at 72.50 in 72.65 mln eur
-Societe Generale, in 69.42 mln eur

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London 0924 GMT            Singapore 3.35 pm (0735 GMT)
   
US dollar
yen 118.32   up from      118.14
sfr 1.3132   up from      1.3127

Euro
usd 1.1923   up from      1.1921
stg 0.6854  down from     0.6860
yen 141.10   up from      140.83
sfr 1.5657   up from      1.5652

Sterling
usd 1.7394   up from      1.7372
yen 205.87   up from      205.14
sfr 2.2841   up from      2.2806

Australian dollar
usd 0.7391   up from      0.7359
stg 0.4230  down from     0.4235
yen 87.07    up from      86.930

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