UK/Euro Financial Market Daily Morning Briefing 14-06-2007

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London shares up early on after NY soared overnight; broker comment helps

LONDON - Leading shares were firm in opening deals, following a strong showing on Wall Street buoyed by positive economic data, and with broker comment helping boost a number of UK blue-chips.
   
At 8.26 am, the FTSE 100 index was 50.3 points firmer at 6,609.9, with all the broader indices also ahead. Early volume was solid, with 538.1 mln shares changing hands in 19,667 deals.
   
Overnight on Wall Street, the DJIA soared, ending 187.34 points higher at 13,482.35, its gains fuelled by positive economic data and easing bond yields.
   
Investors welcomed the combination of strong US retail sales data, which showed the largest increase in 16 months, and import prices data which showed that outside of rising volatile commodity prices, inflation seemed to be tame.
   
Bond yields rose early Wednesday before falling back as investors re-entered the market to take advantage of low prices, which move in the opposite direction of yields.
   
The broader stock indices were also firmer. The Standard & Poor's 500 index closed 22.67 points higher at 1,515.67, while the Nasdaq composite also ended stronger, up 32.54 points at 2,582.31.
   
And the mood in Asia was also bright today. The Nikkei 225 index ended its morning session up 116.62 points at 17,849.39.
  
Meanwhile, the Hang Seng ended its morning session up 225.28 points at 20,804.03.
   
Oil prices were flat in Asian trading hours after the US government's weekly report showed surprisingly little change in the country's gasoline inventories.
   
New York's main oil futures contract, light sweet crude for delivery in July, was down 0.04 usd at 66.22 usd a barrel from 66.26 usd in late trading in the US overnight. Brent North Sea crude for July was 0.04 usd higher at 69.98 usd.
   
Positive broker comment helped boost a number of blue-chips early on, with Bradford & Bingley propelled to the top of the leaderboard by a Credit Suisse upgrade to 'neutral' from 'underperform', Centrica rising after a Citigroup hike to 'buy' from 'hold', and Reed Elsevier gaining on a Goldman Sachs upgrade to 'neutral' from 'sell'.
   
In early deals, Bradford & Bingley shares were 15-1/4 pence higher at 415, Centrica were up 9-1/2 pence at 374, and Reed Elsevier gained 10-1/2 pence to 657-1/2.

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Meanwhile, shares in Home Retail Group also surged, up 8-3/4 pence at 468-1/2, following the release of full-year results in which it reported improved first-quarter sales and margins at its Argos and Homebase businesses, and said its expectations for its full-year to end-February 2008 are unchanged.
   
On the economic front, overnight in the US, the Federal Reserve released its Beige Book of current economic conditions, which showed the US economy "continued to expand" from mid-April through May without higher "overall price pressures".
  
Following the Beige Book, investors will be closely watching the Producer Price Index, a gauge of inflation, due for release later in today's session.
   
On the UK macro front, the Royal Institute of Chartered Surveyors (RICS')UK latest house price survey was released overnight.
   
The UK housing market slowed in May as Britons reacted to the spate of rate hikes delivered by the Bank of England, a leading industry body said today.
   
In its monthly survey of the sector, RICS said a balance of plus 24 pct of its members reported house prices rising in May, lower than the 29 pct in April and below the plus 26 pct predicted.
   
But the focus will be on UK May retail sales figures, scheduled for release later today, which are expected to show volumes rising 0.3 pct month-on-month in May, rebounding from a 0.1 pct decline in April. The annual rate meanwhile is seen easing to 3.8 pct from 4.2 pct.
   
"The May retail sales data could well provide further evidence that the interest-sensitive parts of the UK economy are responding to higher policy rates," said Credit Suisse analysts. "There's evidence that goods inflation was lower in May, so sales volumes could receive a slight fillip from that source," they said.

UK Diary of Events

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

US Summary

For a summary of US stocks at yesterday's close of trade, click here

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AMSTERDAM - Market data at 10.38 am

Major indices
   
AEX 541.51, up 5.11 points, 0.95 pct
Midcap 732.26, up 4.94 points, 0.66 pct
Government bonds mixed

Major gainers
   
KPN gains 1.80 pct at 12.45 eur
   
Wolters Kluwer up 1.70 pct at 22.68 eur after upgrade to 'buy' at Goldman Sachs
   
Reed Elsevier up 1.49 pct 14.35 eur on upgrade to 'neutral' at Goldnman Sachs
   
Akzo Nobel up 1.16 pct aty 61.00 eur after raising sales targets to 2 bln usd in China by 2012
   
Vedior up 1.41 pct at 21.51 eur amid downgrade to 'add' at Petercam
   
Arcelor Mittal 1.29 pct higher at 48.02 eur
   
BAM climbs 2.14 pct at 21.48 eur
   
Tele Atlas up 2.10 pct at 16.06 eur
   
Crucell 1.96 pct higher at 16.65 eur

Major decliners
   
Corporate Express down 0.29 pct 10.33 eur
   
Vopak down 0.29 pct at 44.44 eur after downgrade to 'add'at Petercam
   
Wereldhave down 0.12 pct at 103.97 eur
   
SNS Reaal sheds 0.06 pct at 17.71 eur

Lafite 1998:  06-07.. +91%  v  House Price Index:  06-07..  +7%
Latour 1996: 06-07.. +72%  v  Dow Jones:  06-07..  +14%
Liv-ex 100:   06-07.. +45%  v  Ftse 100:  06-07..  + 9%
CGT - 0% vs CGT- 40%

Source: The Times, December 2006. Free Information Pack Click Here

PARIS - Market data at 10.05 am:

Major indices:
   
CAC-40 up 44.72 points or 0.75 pct at 5,978.99.
SBF-80 up 75.91 or 1.06 pct 7,266.92
SBF-120 up 35.77 or 0.83 pct at 4,368.90

Volume: 2.0 bln eur
36 CAC-40 stocks up
3 CAC-40 stocks down

Major gainers:
   
Aeroports de Paris (ADP) up 3.24 eur or 3.9 pct at 87.24, extending its gains from yesterday when Societe Generale analysts raised their target to 106 eur from 74 in anticipation of a complete privatisation of the airport operator.
   
Danone up 1.89 eur or 3.3 pct at 58.74 as the share continued to recover from recent concerns about its litigation with Chinese partner Wahaha.
   
Air Liquide up 2.11 eur or 2.4 pct at 91.26. Dealers said the shares were lifted by a hike in Citigroup's target to 90 eur from 82 -- although the note was cautious --, while some also pointed to buying encouraged by yesterday's two-for-one share split, which doubled the number of Air Liquide shares in circulation.
   
Suez up 0.71 eur or 1.8 pct at 40.54. After similar claims in Le Figaro recently, business weekly Challenges said Suez has proposed to the French government a takeover of Gaz de France, rather than the merger currently planned. One dealer said the story was not credible, but with "so many scenarios" concerning Suez the stock remains volatile.

Major losers:
   
Sanofi-Aventis down 5.03 eur or 7.5 pct at 62.23 after a US Food and Drug Administration (FDA) panel of experts failed to recommend approval of weight loss drug Acomplia, prompting brokers to lower their recommendations on the stock, dealers said.
   
HSBC, JP Morgan and Exane BNP Paribas all cut their recommendation on Sanofi to 'neutral' and SG Securities moved to 'hold' from 'buy' in the face of a grave threat to Sanofi's prospective earnings.
   
Veolia Environnement down 0.12 eur or 0.2 pct at 57.40

Most active stocks:
   
Sanofi-Aventis, 668 mln eur
   
Total, up 0.67 eur or 1.2 pct at 56.64, 105 mln
   
Danone, 89 mln

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FRANKFURT - Market data at 9.58 am

Major indices

DAX - up 87.16 points or 1.13 pct at 7,767.92
MDAX - up 146.38 points or 1.36 pct at 10,883.52
TecDAX - up 11.64 points or 1.29 pct at 913.93
DAX futures - up 32.00 or 0.41 pct at 7,766.00

Major Advancers
   
Siemens AG, up 2.10 eur or 2.14 pct at 100.36
   
Bayer, up 1.13 eur or 2.08 pct at 55.45, with dealers attributing the rise to UBS AG's decision to add the shares to its 'top 20' list, replacing Novartis AG
   
MAN, up 2.30 eur or 2.22 pct at 105.74, after WestLB upgraded MAN AG to 'buy' from 'hold', with an increased price target of 130 eur from 100, as the broker believes the company's margins are set to reach historical highs
   
DaimlerChrysler, up 1.19 eur or 1.78 pct at 67.86
   
EON, up 1.60 eur or 1.10 pct at 115.71, as a head for the RAG institution has been found. The institution is to look at which parts of the privately and state-owned RAG AG should be publicly-listed at the middle of next year. The private owners include EON, RWE, and ThyssenKrupp

Major Decliners
   
Metro AG, down 0.01 eur or 0.02 pct at 61.53
   
Henkel, down 0.08 eur or 0.07 pct at 113.17

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MILAN - Market data at 9.50 am

Main indices
   
Mibtel index at 33,012, up 0.78 pct
   
S&P/Mib index at 42,282, up 0.84 pct

Main S&P/Mib gainers
   
Finmeccanica up 2.75 pct at 23.52 eur after winning an order, initially for 78 C-27J Spartan military transport planes and worth 2.04 bln usd. At the open the share touched a new high for the year
   
Unicredito Italiano up 1.59 pct at 6.84
   
Capitalia, which is merging with Unicredito, up 1.63 pct at 7.61
   
Fondiaria-SAI up 1.47 pct at 35.94
   
Fastweb up 1.39 pct at 4.02

Main S&P/Mib losers
   
L'Espresso down 0.60 pct at 3.8625, retracing after yesterday's gains

Other stocks in the news
   
Gemina suspended today and tomorrow pending statement. Reportedly the group made an offer to buy the 45 pct stake owned by Macquarie's in the Rome airports, of which Gemina already have a 51 pct stake.
   
Intesa Sanpaolo up 0.82 pct at 5.56. According to reports, Italy's largest bank could decide against the idea of floating its asset management and insurance unit Eurizon in order to extract greater value from it. The plan could be discussed at next Tuesday's board meeting, the reports say.
   
Fiat up 1.32 pct at 20.71 after EU car registration figures for May showed a 5.7 pct jump in new car sales for the Italian group with a rise in the market share to 8.3 pct.

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