UK/Euro Financial Market Daily Morning Briefing 16-05-2006

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London shares lose ground in early deals dragged into the red by weak miners

UK blue chip stocks fell in early deals following a mixed session on Wall Street overnight, with lower commodity prices once again dragging heavyweight miners into the red, dealers noted.
   
At 9.20 am the FTSE 100 index was down 22.2 points at 5,819.3, off a day high of 5855.3. The rest of the indices followed suit.
   
Volume was fair with 330.2 million shares passing hands in 55,532 deals.
   
Meanwhile on Wall Street, US stocks closed mixed Monday, after a whirlwind session that saw heavy losses on the Dow Jones Industrial Average and S&P 500 melt into gains in the final hour of trade amid strong demand for blue-chip stocks.
   
The Nasdaq Composite closed well off its worst levels of the day, but at its weakest level of the year, nonetheless.
   
Overall market sentiment got some help from a sell-off in metals.
   
The Dow Jones Industrial Average rose 47.78 points to 11,428.52, its highest point of the day. Its low for the session was 11,333.04.
   
The Nasdaq Composite fell 5.27 points to 2,238.52, its weakest close since December.
   
Shares of Agilent Technologies edged lower in after-hours trading Monday after the company posted its quarterly results, and shares of Apple Computer dipped following news that a patent complaint had been lodged against the technology giant.
   
Agilent lost 47 cents at 37.50 usd in light trading.
   
The Nasdaq-100 After Hours Indicator fell 2.3 points, or 0.2 pct, at 1,632.03.
   
Asia overnight saw the Nikkei 225 index closing down 328.49 points at 16,158.42 while Hong Kong's Hang Seng index ended its morning trade down 104.01 points at 16,390.83.
   
Still in Asia, oil prices continued to decline in morning trade, following sharp overnight falls in global commodity markets sparked by a slide in the dollar, their benchmark currency.

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New York's main contract, light sweet crude for June delivery, was at 68.75 usd a barrel, down 66 cents from late New York trade.
   
Brent North Sea crude for June delivery was down 82 cents at 68.85 usd.
   
In London, the FTSE 100 was dragged lower by a dip in commodity prices which saw the miners once again losing ground.
   
Anglo American was down 65 pence at 2,217, Antofagasta eased 73 to 2,200, Rio Tinto dipped 62 to 2,966 pence, Kazakhmys shed 26 to 1,178, BHP Billition went lighter by 16-1/2 pence to 1,085-1/5 and Xstrata fell 38 pence to 2,170.
   
Elsewhere, lower oil prices affected BP, lighter by 6-1/2 at 639-1/2, Royal Dutch lost 12 pence at 1,846 while BG Group eased 6 to 685.
   
Schroders appeared to be marred by profit taking, down 31 pence at 1,076 after the asset manager posted a 41 pct increase in first quarter profit.
   
Schroders said pretax profit for the three months to March 31 came in at 71.4 mln stg, up from 50.4 mln stg in the same period last year.
   
Bridgewell Securities maintained its 'neutral' stance.
   
On the upside, Alliance Unichem was the top riser, up 27-1/2 at 936, as the possibility of a merger with chemist Boots, up 19 pence at 741-1/2, looked ever more likely.
    
Boots was a key feature pleasing investors, having been upped to 'buy' from 'hold' with an increased target of 850 pence from 600 by Deutsche Bank.
   
The broker said that Boots' merger with Alliance Unichem makes both strategic and financial sense in its view. It added that in the longer term, the new group is in a strong position to take advantage of, and defend itself against, changing regulation.
   
InterContinental Hotels impressed buyers up 7-1/2 at 976, after the group posted a 27 pct rise in first quarter operating profits, helped by buoyant market conditions around the world over the last few months and last year's restructuring.
   
Compass also pleased investors, better by 8 pence at 242-1/2 as results fell in line with market expectations.

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The world's largest caterer, posted a decline in first half earnings, and said it remains on track to meet its expectations for the full year.
   
Pretax profit from continuing operations fell by 9.4 pct to 184 mln stg from 203 mln stg the previous year. Underlying sales rose by 12.4 pct to 5.66 bln stg from 5.04 bln stg the year before.
   
Utilities were in demand as Spanish utilities company Endesa said net profit surged 87.9 pct to 1.052 bln eur in the first quarter to March 31 from a year earlier, beating forecasts for 588-903 mln after asset sales increased 81 pct to 210 mln eur and the company's tax rate fell 46 pct to 219 mln.
   
National Grid, improved by 3 pence at 563-1/2, following a Dresdner Kleinwort Wasserstein upgrade to 'add' from 'hold' ahead of full year results later this week.
   
Meanwhile, Scottish Power put on 1-1/2 at 554-1/2 and British Energy was up 1 at 661-1/2.
   
Among the financials, Lloyds TSB improved by 5-1/2 at 515-1/2, Prudential went higher by 4-1/2 at 631, and Northern Rock put on 7 at 1,060.
   
On the second tier, shipbuilder and support services supplier VT Group improved 5-1/4 to 464-3/4, after it said it is still interested in acquisitions and alliances in the UK naval shipbuilding industry as it unveiled a 33 pct rise in annual pretax profits to 55.5 mln stg.
   
VT said in its full year results statement that it would "continue to consider alternative options to restructure the UK naval surface ship sector".
   
On the downside, and inline with FTSE 100 peers, miners Vedanta and Lonmin were both in the red down 110 at 1,385 and 114 at 2,577 respectively.

US Summary

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Diary of Events

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AMSTERDAM - Market data at 10.23 am:

AEX index             448.58, down 1.51 point
AMX Midcap index      607.19, down 4.43 points
Government bonds      broadly higher

Major losers:
   
Philips fell 2.0 pct to 24.45
   
Buhrmann eased 1.77 pct at 12.74, falling back after yesterday's gains on the back of takeover speculation
   
TNT gave up 1.23 pct at 28.94, TomTom slipped 0.83 pct at 34.78
   
Wessanen extended yesterday's losses after worse-than-expected first-quarter results, with ABN Amro downgrading the stock to 'add' from 'buy'

Major gainers:
   
Rodamco Europe edged up 0.06 pct at 81.50 after reporting a good set of first-quarter results and repeating its full-year outlook. ABN Amro maintained a 'buy' rating
   
Hagemeyer added 1.02 pct at 3.97
   
Ahold was 0.78 pct higher at 6.42, Numico put on 0.41 pct at 36.45, Heineken firmed 0.44 pct at 31.74 and Unilever advanced 0.28 pct at 53.0

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German shares AFX at a glance outlook

Forthcoming Events
   
TODAY
   
BMW AGM (10.00 am)
   
ZEW index

TOMORROW
   
Lufthansa AGM, Cologne
   
Beiersdorf AGM
   
Commerzbank AGM
   
NordLB annual news conference
   
Linde's Fred Butler ops press conference (9.30 am)
   
ZKA Central Credit Committee of private and public banks news conference

Macroeconomic/Political News 
   
Europe April new car registrations down 7.3 pct yr-on-yr

Market News/Sentiment
   
STOCKWATCH Deutsche Post up pre-open on raised outlook, firm Q1 sales and
EBIT
   
STOCKWATCH Deutsche Boerse down pre-open; report of Euronext/Borsa Italia
talks
   
STOCKWATCH Hochtief upped to 'buy' from 'neutral' at UBS, target 60
eur

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Paris shares AFX at a glance outlook

Forthcoming Events
   
TODAY
   
Scor Q1 results and AGM
   
Vinci AGM

TOMORROW
   
Alstom FY results
   
APRR AGM
   
Wavecom AGM (EQUITYNEXT)
   
Q1 employment (8.45 am)
   
April industrial investment survey, (8.50 am)

Macroeconomic/Political/Miscellaneous News
    
Villepin says EADS Sogerma maintenance plant closure is 'major worry' for
govt

Market Sentiment
   
Carrefour upgraded to 'overweight' from 'underweight' by Lehman, target 51 eur.
   
Saint-Gobain started 'overweight' at JP Morgan; target 65 eur.

L'Oreal cut to 'hold' vs 'buy' at Citigroup
   
Rhodia upgraded to 'hold' from 'sell' by Citigroup

Forex

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