UK/Euro Financial Market Daily Morning Briefing 12-04-2006

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London shares easier in early deals reflecting New York drop; miners weak

UK blue chips were easier in early deals as the impact of sharp falls overnight on Wall Street and in Asia today, weakness in the heavyweight mining sector, and a disappointing trading update from retail group GUS offset good trading news from brewer SABMiller, dealers said.
   
At 9.14 am, the FTSE 100 index was 29.1 points lower at 5,987.4, back below the 6,000 level.
   
The broader FTSE indices were all lower as well, with the FTSE 250 index reversing earlier gains to shed 0.4 points at 9,743.4 in spite of strong gains by the London Stock Exchange following Nasdaq's stake purchase news.
   
Early volume was fair, with 285 mln shares changing hands in 42,264 deals.
   
Overnight, US stocks fell sharply amid concern over interest rates, high oil prices and political tensions in the Middle East, which overshadowed a solid kick-off to the latest earnings season.
   
The DJIA finished 51.70 points lower at 11,089.60, while the Nasdaq composite index ended 22.92 points weaker at 2,310.35.
   
The selling continued today in Asia. The Nikkei 225 index ended 255.58 points lower at 17,162.55, while the Hang Seng index closed 165.05 points weaker at 16,310.76
  
Oil prices, however, fell in Asian trading on profit-taking, after they surged to near 70 usd a barrel, although lingering jitters about Iran kept the market edgy.

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New York's main contract, light sweet crude for delivery in May, had dropped 0.08 usd to 68.90 usd a barrel from its close of 68.98 usd in the US overnight.
   
In London, weakness in the miners was an early feature, with the sector running in to profit-taking following recent sharp gains as recent strength in the gold price was reversed.
   
BHP Billiton topped the blue chip fallers board, down 29-1/2 pence to 1,126, while Rio Tinto shed 56 pence at 3,073, Anglo American lost 32 pence at 2,393, and Xstrata dropped 35 pence to 2,390.
   
Elsewhere, GUS was also a weak feature, down 23 pence to 1,022 after the UK retailer reported worse-than-expected second half underlying sales at its  Homebase chain and warned on the unit's full year profit outturn, blaming a further weakening of the UK home improvement market.
   
The disappointment at the DIY business overshadowed an in-line performance from Argos, the high street catalogue retailer, and another stellar performance from Experian, the group's credit information division.
   
Merrill Lynch said both its own estimates and the consensus forecast will likely be reduced to reflect the weakness at Homebase.
   
But on the upside, shares in SABMiller jumped 10 pence higher to 1,119 after the brewer revealed that it saw organic growth of 5 pct in lager volumes for the 12 months to March 31 2006.
   
In a trading update, SABMiller added that its financial performance was in line with management's expectations.
   
Meanwhile shares in Amvescap bounced back after recent falls, adding 5 pence at 529 helped by news that Morgan Stanley has hiked its objective price to 620 pence from 595 while reiterating its 'overweight' stance on the stock.

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And drugs giant AstraZeneca also benefited from news of a price target hike, gaining 16 pence at 2,925, with Deutsche Bank upping its aim to 3,300 pence from 3,200 while repeating its buy stance.
   
The stock also found support from good results overnight from US peer Genetech, with GlaxoSmithKline higher in sympathy too, up 2 pence to 1,488.
   
On the second line, London Stock Exchange shares jumped over 14 pct in value, up 148 pence to 1,186 following yesterday's news that US stock market group Nasdaq has acquired a near-15 pct stake in the company, at a price of 1,175 pence per share, making it the biggest shareholder of the UK exchange.
   
This move comes less than two weeks after Nasdaq withdrew its spurned takeover offer for the LSE.
   
In reaction, WestLB raised its rating for LSE to 'hold' from 'reduce, upping its target to 1,175 pence from 950.
   
Meanwhile well-received trading news helped WH Smith shares take on 26-3/4 pence at 434-1/4, with luxury goods group Burberry also lifted by a positive trading update, adding 15-1/2 pence at 462-1/2.
   
On the downside with mid caps, ex-dividend factors pulled back shares in Rank Group, BBA, Forth Ports, and IMI.

US 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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PARIS - Market data at 09.25 BST

Major indices:
   
CAC-40 down 37.19 points or 0.73 pct at 5,075.41
SBF-80 down 52.84 points or 0.86 pct at 5,966.97
SBF-120 down 26.89 points or 0.72 pct at 3,696.42

Volume: 650 mln eur
3 CAC-40 stocks up
36 CAC-40 stocks down
1 CAC-40 stock unchanged

Major gainers:
   
Euronext, up 1.60 eur or 2.42 pct at 67.80 amid continuing talk about mergers among exchanges
  
Suez, up 0.06 eur or 0.19 pct at 31.76, amid reports it plans a poison pill defence against a widely anticipated hostile bid from Enel 
   
Essilor, up 0.10 eur or 0.14 pct at 72.00

Major losers:
   
Eurotunnel, down 0.02 eur or 5.26 pct at 0.36, after seeking to prolong its debt waiver and estimating its full year 2005 loss shrank to 300 mln eur.
   
Alstom, down 2.25 eur or 3.45 pct at 63.00, rebounding from a 9.81 pct loss earlier in the session.
   
Publicis, down 0.54 eur or 1.70 pct at 31.29
   
Bouygues, down 0.69 eur or 1.65 pct at 41.21, after a report that its telecoms unit was questioning its own viability.

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German shares at a glance outlook

Forthcoming Events
   
Today
   
DaimlerChrysler AGM (10.00 am)
   
ECB Vice-President Juergen Stark press conference (11.00 am)

Tomorrow
   
RWE AGM (10.00 am)
   
Fraport March traffic figures

Company News
   
BASF issues 1 bln eur benchmark bond with 5-yr maturity
   
Andritz says acquisition price for Siemens' VA Tech Hydro 180-190 mln eur
   
Germany's Bosch to invest 620 mln eur in China by 2008

Macro-Economic/Political News
   
German March final CPI unchanged from Feb, up 1.8 pct yr-on-yr
   
German March wholesale prices up 0.5 pct from Feb, up 2.5 pct yr-on-yr

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