UK/Euro Financial Market Daily Morning Briefing 10-05-2006

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London shares remain down in early deals as Old Mutual fails to impress UPDATE

LONDON - London shares remained in negative territory in early trade
as a trading update from Old Mutual failed to impress and investors remained a
little muted ahead of the expected FOMC decision on interest rates, traders
noted.

At 9.12 am the FTSE 100 Index was down 5.5 points at 6100.1 -- across the
wider market only the TechMark 100 stayed positive up 3.55 at 1,466.10.

Volume was moderate with 279.3 mln shares moving hands in 323,87 deals.

Meanwhile on Wall Street, US stocks closed mixed yesterday as investors
braced for hints on the Federal Reserve's future course on interest rates, but
broad-based gains in blue-chip stocks lifted the Dow Jones Industrial Average to
yet another fresh six-year high.

The Dow ended 55.23 points higher at 11,639.77.

A profit warning from Dell weighed on the technology sector, while gold
futures blew past 700 usd an ounce to help pace a rally in metals stocks.

Following the close in the US, shares in Cisco Systems reversed course to
move lower after it issued a disappointing forecast for its current quarter.

In Asia, the Hang Seng ended the morning down 109.47 points at 17,024.52
while Japan's Nikkei 225 Index closed down 238.98 points at 16,951.93.

In London, insurer Old Mutual was the FTSE 100's biggest loser, easing 4
pence to 195-34, as its figures failed to meet market expectations.

Old Mutual said total life sales for the first three months of 2006 came in
at 395 mln stg on an annual premium equivalent basis, an 11 pct increase on the
same period a year earlier.

However, US broker Merrill Lynch said that they still disappointed --
failing to meet forecasts.

The results included the the maiden inclusion of recent acquisition
Skandia's new business figures, with growth of 22 pct in sales well below the
brokers forecast of 30 pct.

This was attributed to lower than expected volumes in the UK, still Merrill
Lynch decided to retain its 'neutral' stance as valuation still appears
'moderately attractive'.

GlaxoSmithKline was another loser, down 9 at 1,548 pence, hit by ex-dividend
issues which also affected a number of other blue chip heavy weights including,
Antofagasta, Rexam, Royal Dutch Shell and BP.

On the upside, buyers turned on to DSG, up 12 pence at 206-1/4 after it said
it expects its year to April 29 2006 underlying pretax profit will be ahead of
current market expectations, and in the 312-318 mln stg range, after a robust
second half performance.

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Looking ahead, DSG expects strong sales of digital products to continue "at
least" through the period leading up to this summer's World Cup.

In response, Merrill Lynch reiterated its 'neutral' rating and said DSG
reported stronger than expected like-for-like sales growth in the second half,
boosted by an acceleration of TV sales in its core electrical units.

There was also interest in Boots, up 20-1/2 pence at 724-1/2 and Alliance
Unichem, improved by 27 at 908-1/2, following news that the Competition Appeals

Tribunal concluded that it has no reason to object to the Office of Fair
Trading's view that the merger of the two companies should be allowed to
proceed.

In response US broker Morgan Stanley upped its rating to 'equal-weight' from
'under-weight' with a revised aim price of 735 pence.

Also in favour was Orthopaedics group Smith & Nephew, firming 14-1/2 pence
to 206-3/4, after it noted that it received approval from the Food and Drug
Administration for its Birmingham Hip resurfacing system, a new metal-on-metal
hip resurfacing product.

The Birmingham Hip is the only FDA-approved hip resurfacing product
available for use in the US, S&N said.

As the price of gold reached record highs and oil prices recovered above the
70 usd per barrel level, certain mining and energy stocks reaped the rewards.

Among the miners Kazakhmys improved 28 pence to 1,298, BHP Billiton
increased by 17 to 1,211 while Xstrata climbed 21 pence to 2,409.

British Energy and Scottish & Southern both upped tempo -- better by 10-1/2
at 691-1/2 and 13 at 1,166 respectively.

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There was further good news in the market as shares in Scottish & Newcastle
edged higher by 4-1/2 to 512 after a solid set of results from the UK pubs
group's eastern European joint venture with Carlsberg.

This morning, Baltic Beverages Holdings (BBH) said first-quarter net sales
rose 15 pct to 342 mln eur, with beer volumes up 1 pct.

At the same time, the group said it sees a rise in Russian market share in
the full year as it flagged up margins should be stable at around 20 pct.

On the second tier, Dimension Data eased 1 pence to 51-3/4 as the company
said growth was achieved in all regions, except for Europe which was below par.

On the upside, shares in 888 edged higher, better by 0-1/2 pence at 235
after the online gaming company reported a strong start to the current year,
boosted by significant growth in revenues from poker.

In a trading statement, 888 said net gaming revenue in the first quarter to
March 31 increased by 42 pct to 84 mln usd. Casino revenues accounted for 45 mln
usd, up 15 pct year-on-year, while poker revenues soared 95 pct to 39 mln.

Elsewhere, shares in Weir Group gained 1-3/4 pence to 474 after the
industrial pump maker issued an upbeat trading statement.

The group said it now expects full-year profit before goodwill and
exceptionals to be at the upper end of recent market estimates of between 69.0
mln and 73.2 mln stg.

Diary of Events

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

US Summary

For a summary of the days trading in the US click here

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Paris shares AFX market data at 10.10 am; mkt eases from yesterday's 5-yr highs

PARIS - Market data at 10.10 am:

Major indices:
CAC-40 down 22.69 points or 0.43 pct at 5,289.49
SBF-80 up 10.57 points or 0.17 pct at 6,226.85
SBF-120 down 13.34 points or 0.35 pct at 3,850.58

Volume: 590 mln eur
14 CAC-40 stocks up
22 CAC-40 stocks down
4 CAC-40 stocks unchanged

Major gainers:
-Technip, up 1.20 eur or 2.45 pct at 50.20, after saying it won a contract from BP to build an acid production plant in China.
-Michelin, up 1.05 eur or 1.78 pct at 60.05, building on yesterday's gains as the market dismissed the impact of a French plant being idled by workers blockading supplies.
-EADS, up 0.38 eur or 1.21 pct at 31.75

Major losers:
-Renault, down 1.40 eur or 1.45 pct at 94.95, coming off yesterday's market-leading jump of 3.21 pct.
-Lagardere, down 0.95 eur or 1.44 pct at 65.05, after reporting flat first quarter sales.
-Thomson, down 0.15 eur or 0.91 pct at 16.26. It holds its annual shareholders' meeting today.

Most active stocks:
-France Telecom, 50 mln eur, down 0.01 eur or 0.06 pct at 18.16
-Total, 45 mln eur, down 0.70 eur or 0.36 pct at 224.50, amid a slight fall in crude oil prices
-BNP Paribas, 40 mln eur

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German shares at a glance outlook; DaimlerChrysler seen gaining on upgrade

FRANKFURT - Shares are seen opening lower following a mixed showing on
Wall Street overnight and amid caution ahead of today's decision on US interest
rates by the Federal Open Market Committee, though DaimlerChrysler is expected
to
gain after Deutsche Bank upped the stock to 'buy' from 'hold'.
    At 8.36 am, brokerage Lang & Schwarz indicated the DAX 30 index would open
at about 6,123, down some 17 points from yesterday's close at 6,140.72.
   
FORTHCOMING EVENTS TODAY
-Hochtief AGM
-Deutsche Post AGM (10.00 am)
-Fraport Q1 results
-E.ON Q1 results. Adjusted EBIT forecast 2.481-2.643 bln eur vs 2.567 bln
-EnBW Q1 results, investors teleconference
-Schwarz Pharma AGM
-Fresenius AGM, Frankfurt (10.00 am)
-TUI AGM
-Celesio Q1 results
-T-Online Q1 results

TOMORROW
-Preliminary Q1 GDP
-HVB Q1 results
-Bilfinger Berger Q1 results
-Premiere Q1 results
-Deutsche Telekom Q1 results
-Adidas-Salomon AGM, Fuerth
-Lufthansa Q1 results. Operating loss forecast 29 mln eur vs loss 26 mln
-GEA Group Q1 results
-Postbank AGM
-WestLB Q1 results
-BUBA's Meister speaks at Ulm University (4.00 pm)
-BUBA's Weber speech on oil price shocks and monetary policy in euro area,
at Central Bank of Ireland (5.00 pm)

TODAY'S PRESS
-SAP board to get another 100 mln eur in bonuses in 2010 (Handelsblatt)
-Texas Pacific Group to increase shareholdings in DAX companies
(Handelsblatt)
-German companies want changes in squeeze-out rules (Handelsblatt)
-VW's Bernhard says unprofitable components plants may well be closed down
(Handelsblatt, Financial Times Deutschland)
-Frankfurter Volksbank wants more mergers among cooperative banks
(Boersen-Zeitung)
-Kloeckner & Co plans June IPO (Financial times Deutschland)
-German health reform plans hit dead end (Financial Times Deutschland)
-Electrolux closes German plant earlier than planned (Sueddeutsche Zeitung)
-Deutsche Post mulls push into recycling business through Exel - report
(Frankfurter Allgemeine Zeitung)
-Kirch gets necessary shareholder support for complaint against Deutsche
Bank - report (Frankfurter Allgemeine Zeitung)

-Euronext sounding out merger with derivates exchange CME - report
(Frankfurter Allgemeine Zietung)
  
COMPANY NEWS
-Fraport Q1 EBITDA up 2.2 pct as cargo revenues offset higher personnel costs
-Schering wins European marketing approval for contraceptive Yasminelle
-MLP Q1 net, revenues higher, but miss forecasts
-Celesio Q1 pretax 139.2 mln eur, up 21.4 pct
-United Internet takes over British Fasthosts Internet Limited
-Palfinger Q1 EBIT 17.5 mln eur
-Raiffeisen International Bank-Holding Q1 net 124 mln eur, up 34 pct
-Thiel Logistik Q1 net 3.4 mln eur
-Conergy Q1 sales 86.3 mln eur vs 45.8 mln

MACRO-ECONOMIC/ POLITICAL NEWS

*GERMAN MARCH CURRENT ACCOUNT SURPLUS 9.0 BLN EUR VS 11.0 BLN IN FEB

*GERMAN MARCH TRADE SURPLUS 14.3 BLN EUR VS 13.0 BLN IN FEB

*GERMAN APRIL WHOLESALE PRICES UP 1.0 PCT VS MARCH, UP 3.2 PCT YR-ON-YR
      

MARKET NEWS/ SENTIMENT

-STOCKWATCH DaimlerChrysler up pre-open as Deutsche Bank ups to 'buy' from
'hold', lifts target to 59 eur from 45

-STOCKWATCH - MLP down pre-open; Q1 figs miss consensus, outlook not

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