UK/Euro Financial Market Daily Morning Briefing 13-11-2007

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By 8.55 am, the FTSE 100 was off 42.2 points at 6,295.7 after closing up 33 points yesterday. The broader FTSE 250 was off 38.2 at 10,856.00.
   
Early volume was average with 262 mln shares trading in 59,652 trades.  Trading Central, a technical analysis service sees key support levels for the cash index at 6270, 6,225 and a short-term target of 6,110. It sees key resistance levels at 6,375, 6,440 and at 6,510.
   
Last night, the Dow fell 55.19 to 12,987.55, having been up over 100 points at one stage during the session. The Dow has now fallen 1,210.55, or 8.53 pct, from the all-time trading high of 14,198.10 that it reached on Oct 11.
   
The Standard & Poor's 500 index on Monday fell 14.52 to 1,439.18, while the Nasdaq composite index dropped 43.81 to 2,584.13. Over in Asia, the Nikkei 225 index closed down 70.5 points at 15,126.6 while
over in Hong Kong the Hang Seng closed up 137.62 points at 27,803.35.
   
Meanwhile, world oil prices eased further on Tuesday, trading near 94 usd a barrel in Asia ahead of a weekend meeting of the OPEC oil cartel. In London this morning, telecom stocks dominated the early risers with Vodafone up 6.4 at 188.3 after raising its full year revenue and profit guidance. It reported higher first half revenue and adjusted operating profit bolstered by emerging market growth.
   
UBS said the profit was ahead of its forecasts and it would review its forecasts following the analyst presentation but at this point, expects an upgrade to consensus EPS of about 3 to 4 pct to about 11.4 pence.
   
In other reaction, Cazenove said the figures were 'solid' and also said it expected to raise its EPS estimates.  Cable & Wireless was also up 5.5 at 184.6 after announcing plans to revamp the management of its international business while posting a more-than-doubled first half group pretax profit and gave a confident outlook.
 
Cazenove said the headline numbers, with the exception of revenue, look very strong and the results suggest an upside to its sum-of-the-parts value of 220p, although still affected by the weak US dollar.
   
Among broker related moves, Unilever rose 32 to 1729 after Goldman Sachs upped its rating to 'neutral' from 'sell', while Daily Mail & General Trust added 5-1/2 to 566-1/2 after Merrill Lynch reported initiated coverage in the group with a 'buy' rating.
   
Finally, Royal & Sun Alliance ticked up 0.2 at 86.4 after bullish comments from Citigroup which upped its target to 175p and reiterated its 'buy' stance. However, British Energy fell 12.5 to 505 after reporting a fall in nuclear production after outages at Hinkley Point B and Hunterston B stations earlier this year.

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Elsewhere resource stocks acted on a drag, accounting for a significant portion of early losses as oil prices slipped ahead of the expiration of crude options today and the expiration of the December crude contract Friday.
   
Tullow Oil dipped 12 to 615, BG Group fell 18 to 959 and BP eased 5 to 581. And miners drifted lower as Australian counterparts surrendered some of the gains made in the past three sessions.
   
Rio Tinto was off 100 at 5,558 after officially rejecting BHP's 3-1 share offer with Anglo American down 35 at 3,294, Xstrata off 56 at 3,260 although BHP was up 5 at 1,608.
   
Financial stocks reversed some of yesterday's recovery amid continued bearish news eminating from the US with Alliance & Leicester off 20 at 673, Royal Bank of Scotland down 12 at 428 and Barclays off 8 at 504.
   
Morgan Stanley added to the bearish mood among financials after cutting its rating on European banks to 'cautious' from 'in-line'. The broker said the deepening of the ongoing financial crisis could have a
serious impact on the economy and it sees greater risk of the current credit crunch leading to a recession in the US.
   
Turning to the midcaps, Babcock International topped the leaderboard after posting solid H1 earnings with pretax profit jumping by 48 pct on strong organic growth from its marine, defence services and network businesses.
   
The shares rose 30 to 603. Earnings news also boosted VT Group, up 14 at 599 after posting solid H1
results.
   

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In economic news, more bad news for UK homeowners after a survey revealed that the proportion of chartered surveyors in the UK reporting lower house prices in October stood at its highest since July 2005, a leading industry group said today.
   
In its monthly survey of the sector, the Royal Institution of Chartered Surveyors said a balance of -22.2 pct of its members reported lower house prices during the month.
   
That's the third month in a row that a majority of surveyors have reported lower house price increases and is the biggest negative since July 2005's -30.9 pct.
   
Later this morning, inflation figures are expected to show that the annual CPI - the key measure of inflation - edged up to 1.9 pct in October, although this is still below the Bank of England's 2.0 pct target.
   
On a monthly basis, the CPI is forecast to have risen by 0.3 pct, after a 0.1 per cent rise in September. Annual core CPI inflation - which excludes energy, food, alcoholic beverages and tobacco - is expected to edge up to 1.7 pct from 1.5 pct previously.

UK Diary of Events

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

US summary

For summary of US stock at yesterday close of trade click here

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Mibtel at 29,341, down 0.84 pct, S&P/Mib at 37,836, down 0.92 pct

Main S&P/Mib losers
Seat Pagine Gialle down 3.28 pct at 0.3395 eur, Saipem down 2.74 pct at 29.49, leading the decline of all oil-related stocks
   
Buzzi Unicem down 1.84 pct at 17.62 ahead of the release of third quarter results UniCredit down 1.43 pct at 5.36. Its board is meeting today to discuss third quarter results, which however are expected to be released tomorrow, before the opening of the market, Eni down 1.32 pct at 23.09

Main S&P/Mib gainers
Parmalat up 1.38 pct at 2.565. Telecom Italia up 0.71 pct at 2.12, benefiting from the bullish mood on the
sector following Vodafone results, and after Telefonica, who is a leading shareholder of the Telco group that controls more than 20 pct of Telecom Italia, said it would subscribe to its share of the Telco capital hike and that the synergies between Telefonica and Telecom Italia are estimated at 300-500 mln eur per year
   
Mondadori up 0.46 pct at 6.38. Alitalia up 0.34 pct at 0.8445. Bulgari up 0.03 pct at 10.09

Other stocks in the news
Tiscali up 3.84 pct at 2.3925 after the release of nine-month results that were at the top of range given by analysts
   
Banca Monte dei Paschi di Siena down 0.15 pct at 3.6675 as Morgan Stanley downgraded the stock to 'underweight' with a 4.10 eur target as it sees the stock struggling to perform until tangible synergies from the acquisition of Antonvenenta start to come through
   
Mediobanca down 0.58 pct at 16.32. Yesterday, market regulator Consob announced that Carlo Tassara, owned by financier Romain Zaleski who is said to be close to Intesa Sanpaolo chairman Giovanni Bazoli, bought a 2.206 pct stake in the investment bank.

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FRANKFURT - Market data

DAX - down 16.68 points, or 0.60 pct, at 7,760.16
MDAX - down 150.47 points, or 1.51 pct, at 9,839.67
TecDAX - down 31.88 points, or 3.17 pct, at 972.90
DAX futures - up 46.50 points, or 0.60 pct, at 7,798.50

Major Decliners:
   
Volkswagen, down 6.26 eur, or 3.53 pct, at 171.14, as autostocks declined under continued pressure from a strong euro versus the US dollar
   
Daimler, down 2.30 eur, or 3.19 pct, at 69.81, also coming under pressure from the underperforming sector
   
MAN, 2.63 eur, or 2.25 pct, at 114.38,
   
Thyssenkrupp, 0.77 eur, or 1.83 pct, at 41.39, as losses carry over from yesterday
   
Continental, down 1.81 eur, or 1.83 pct, at 97.26, as the tyre and auto parts specialist also succumbed to pressure of the auto sector
   
Major Advancers:
   
Deutsche Postbank, up 2.60 eur, or 5.45 pct, at 50.30, continuing gains after Goldman Sachs upgraded the stock to 'buy' from 'neutral' yesterday
   
Deutsche Telekom, up 0.18 eur, or 1.27 pct, at 14.40
   
Fresenius Medical Care, up 0.22 eur, or 0.62 pct, at 35.61, as the counter-cyclical qualities of the stock outweighed pressure from a weak US dollar. Adidas, up 0.25 eur, or 0.52 pct, at 48.50
   
Deutsche Bank, up 0.37 eur, or 0.44 pct, at 84.75 adding to yesterday's gains as banking shares rebounded  Other Stocks in Focus
   
MDAX-listed Fraport, up 0.57 eur, or 1.06 pct, at 54.37, after the airport operator released third-quarter figures that came in better than expected and WestLB raised it stance to 'add' from 'hold'
   
MDAX-listed Bilfinger Berger, down 2.31 eur, or 4.00 pct, at 55.41, after the construction specialist released third-quarter figures that analysts said came in slightly lower than expectations.
   
MDAX-listed Celesio, down 0.06 eur, or 0.17 pct, at 36.15, but outperforming the market after the group posted nine-month earnings figures that were largely in line with expectations, prompting WestLB to up its stance on the shares to 'buy' from 'hold'.

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MAJOR INDICES

AEX 504.82, down 3.50 points, AMX Midcap 689.74, down 5.08 points Government bonds mixed

MAJOR DECLINERS
Randstad falls 2.80 pct to 31.95 eur, peer Vedior down 2.62 pct at 13.74  KPN slips 1.35 pct at 12.46 eur after Credit Suisse downgraded it to 'neutral' from 'outperform', according to dealers, and cut its target to 13.5 eur from 15
   
Fortis down 0.67 pct at 17.74 eur amid concerns overs its third-quarter results and news Merrill Lynch has upped the stock to 'buy'
   
Akzo Nobel off 0.51 pct at 52.57 eur on news SNS Securities upped its rating to 'buy' from 'hold' but kept its price target unchanged at 63 eur
   
USG People off 2.46 pct at 17.86 eur Boskalis Westminster down 0.73 pct at 42.10 eur amid price target upgrades at ING and ABN Amro after the Dutch dredging company raised its full-year guidance yesterday
   
Arcadis slumps 7.35 pct at 45.40 eur as SNS Securities cut its rating to 'reduce' from 'hold' and slashed its price target to 46 eur from 67
   
Imtech down 0.39 pct at 17.88 eur, off earlier gains as it won a 22 mln eur air and climate systems contract from Westfield Holdings for the new Westfield London mega shopping centre

MAJOR GAINERS
Unilever up 2.55 pct at 23.74 eur after being upped to 'neutral' from 'sell' by Goldman Sachs as part of a sector review Reed Elsevier up 0.49 pct at 12.40 eur amid reports it has emerged as a surprise suitor for Emap's business publishing division
   
Crucell surges 3.72 pct at 13.40 eur after reporting solid third-quarter results and announcing its rabies antibody has won fast-track status at the FDA Ordina up 1.12 pct at 11.72 eur

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