UK/Euro Financial Market Daily Morning Briefing 13-04-2007

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London shares open higher after Wall Street gains; commodity stocks up
 
Leading shares were up in opening trading, with commodity stocks higher as crude prices edged up on supply concerns and after Wall Street closed higher overnight, dealers said.
   
At 8.55 am, the FTSE 100 index was 16.4 points higher at 6,433 after it closed yesterday up 3.1 points at 6,416, while the FTSE 250 index had gained 34.3 points to 11,929.
   
Wall Street closed higher as investors looked past warnings of lacklustre retail sales and a greater-than-expected increase in weekly jobless claims. 
   
The DJIA closed up 68.34 points or 0.55 pct at 12,552.96, while the Nasdaq composite index advanced 21.01 points or 0.85 pct at 2,480.32.
   
On the US economic front today, investors' eyes will be on wholesale inflation figures which is seen rising 0.8 pct, as measured by the Labor Department's Producer Price Index.
   
Excluding volatile food and energy prices, "core wholesale inflation" is seen rising 0.2 pct in March. The overall rise is led by higher fuel prices.  "Transportation equipment prices should continue to be soft and help keep the core PPI rate from rising more than our 0.2 pct expectation.

Still, year-ago changes in headline and core PPI are moving in the wrong direction for the Fed to have any confidence in lower the funds rate," Jeoff Hall of Thomson IFR Markets said.
   
Elsewhere, the US international trade deficit is seen widening to 60 bln usd in February as the cost of petroleum imports more than offsets growth in merchandise and services exports, said Hall.
   
Asian indices were lower today, with Tokyo's Nikkei 225 index closing down 176.5 points at 17,363.9 and Hong Kong's Hang Seng index had shed 47.4 points lower at 20,329.7 by midday.
   
In London, blue-chip commodity stocks were higher after crude prices edged up in Asian trade on concerns over tightening US gasoline supplies and after an international oil policy watchdog urged OPEC to increase production

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Earlier this morning, New York's main oil futures contract, light sweet crude for delivery in May was up 19 cents at 64.04 usd per barrel after surging 1.84 usd to 63.85 usd in US trading overnight.
   
Brent North Sea crude for May delivery also added 19 cents to 68.91 usd per barrel.
   
BP was up 9 pence at 572, Royal Dutch Shell edged up 26 pence at 1,724, Lonmin was 29 pence firmer at 3,470 and Kazakhmys was 7 pence higher at 1,186.
   
Elsewhere, UK drug heavyweights AstraZeneca and GlaxoSmithKline gained after US peer Merck & Co raised its full year guidance last night by as much as 7 pct.
   
In response, SEB Enskilda said it views this as an indication that the pricing environment in key drug markets is better than originally assumed in company guidance.
   
AstraZeneca was up 36 pence at 2,787 and GlaxoSmithKline was 14 pence higher at 1,447.
   
Turning to M&A activity, Cadbury Schweppes was 4-1/2 higher at 671-3/4 after the Wall Street Journal reported that Cott Corp is talking with private-equity firms about joining its operations with Cadbury's beverage arm.
   
Elsewhere, Barclays was 16-1/2 pence higher at 754-1/4 after the Financial Times reported that JP Morgan may be poised to bid for the UK bank.
   
On the downside, also in M&A activity, Imperial Tobacco fell back 9 pence to 2,280 after the Financial Times reported that buyout group CVC is in advanced stages of forming a powerful financial consortium to trump the tobacco group's 12.3 bn stg bid for Altadis.
   
Its peer British American Tobacco was also down 9 pence at 1,586 in sympathy.
   
Turning to the midcaps, Croda International was up 9 pence to 667 after Morgan Stanley reiterated its 'overweight' stance and raised its price target to 750 pence from 725. 

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Morgan Stanley said its higher target implies around 11 pct upside, reflecting better-than-expected margins within the "Old Croda", before its acquisition of Uniqema from ICI in September 2006.

Elsewhere, Aveva Group rallied 14 pence to 860 after investors locked in profits yesterday when the group announced a strong trading update.
   
On the downdside, Bunzl was 4-1/2 pence lower at 731 after Credit Suisse downgraded the group to 'neutral' from 'outperform' with an increased price target of 710 pence from 700 following a strong rebound on the back of a reassuring set of full-year 2006 results.

Credit Suisse said Bunzl has outperformed the local index by 12 pct over the past three months and has exceeded its price target.

UK Diary of Events

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US Summary

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PARIS  - Market data at 10.33 am:

Major indices:
   
CAC-40 up 21.52 points or 0.37 pct 5,770.46
SBF-80 up 8.99 or 0.12 pct at 7,300.66
SBF-120 up 13.93 or 0.33 pct at 4,240.84

Volume: 888 mln eur
21 CAC-40 stocks up
18 CAC-40 stocks down
1 CAC-40 stock unchanged

Major gainers:
   
Peugeot up 1.698 eur or 3.15 pct at 55.30 amid renewed speculation it may sell car parts subsidiary Faurecia, which was up 0.20 or 0.35 pct at 57.00 after going as high as 59.80. Peugeot, which rejected the Faurecia rumours, was also lifted by European new-car sales figures for March, showing an increase in the company's volumes and market share.
   
Sanofi-Aventis up 1.11 or 1.69 pct at 66.72
   
Total up 0.55 or 1.04 pct at 53.49 on the back of rising crude prices
   
BNP Paribas up 0.74 or 0.92 pct at 81.04 after being upgraded to 'outperform' from 'neutral' by Credit Suisse.

Major losers:
   
Eiffage down 2.16 or 1.87 pct at 113.54 as the stock remains volatile amid ongoing speculation about a battle for control between shareholders ahead of next week's AGM. French markets regulator AMF, meanwhile, said it has launched an official inquiry into trading in Eiffage shares.
  
Thales down 0.58 or 1.32 pct at 43.49
   
PPR down 1.38 or 1.07 pct at 127.20 as it continued to see profit-taking following Tuesday's announcement of a takeover bid for German sportswear maker Puma.

Most active stocks:
   
Peugeot, 108 mln eur
   
Total, 77 mln eur
   
Sanofi-Aventis, 76 mln

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FRANKFURT  -  market data at 10.21 am 

Major indices

DAX - up 31.82 points, or 0.45 pct, at 7,174.77
MDAX - up 70.05 points, or 0.67 pct, at 10,595.49
TecDAX - up 5.53 points or 0.64 pct at 874.10
DAX futures - down 8.00 points, or 0.11 pct, at 7,219.50

Major advancers:
   
SAP, up 1.06 eur or 3.08 pct at 35.44, after Merrill Lynch reiterated its 'buy' rating and maintained its price target at 57.50 eur, saying that after a shaky first quarter things are looking more positive for the software maker in the coming quarter
   
Hypo Real Estate, up 0.96 eur or 1.98 pct at 49.35
   
Deutsche Boerse, up 2.54 eur or 1.46 pct at 175.69, after Credit Suisse raised its price target to 193 eur per share from 176 and reiterated its 'outperform' rating, citing a strong start to the year for the exchange operator
   
Bayer, up 0.68 eur or 1.41 pct at 48.62
   
Lufthansa, up 0.23 eur or 1.06 pct at 21.86, after the shares in the airline reacted belatedly to positive passenger and cargo load numbers yesterday

Major decliners:
   
Infineon, down 0.10 eur or 0.85 pct at 11.68, driven lower on the back of Korean rival Samsung Corp's release of poor first-quarter results due to weak DRAM prices and weaker-than-expected DRAM demand
   
DaimlerChrysler, down 0.37 eur or 0.60 pct at 60.90
   
Metro, down 0.18 eur or 0.34 pct at 52.77 after Citigroup lowered its stance on the European retail sector to 'underweight'
   
Adidas, down 0.16 eur or 0.37 pct at 42.58
   
EON, down 0.13 eur or 0.12 pct at 108.02
   
Other major movers:
   
MDAX-listed Kloeckner & Co, up 2.01 eur or 4.45 pct at 47.21
   
MDAX-listed Wacker Chemie, up 5.09 eur or 3.79 pct at 139.24 after Morgan Stanely raised the target to 161 eur per share from 140 and reiterated its 'overweight' stance

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