UK/Euro Financial Market Daily Morning Briefing 18-07-2006

London shares open lower as US gaming scandal adds to Middle East woes

Leading shares were lower in volatile opening deals as investors continued to fret over the escalating violence in the Middle East, with PartyGaming hit by an on-line gaming scandal in the US, dealers said.   
   
At 9.04 am, the FTSE 100 was down 15.3 points at 5,685.7, in-line with the weaker wider market.
    
Meanwhile, Wall Street limped to a mixed finish as uncertainty over the Middle East conflict and a disappointing earnings report from Citigroup gave traders little impetus to buy after last week's sell-off.
   
The DJIA rose 8.01 to 10,747.36, the S&P 500 lost 1.71 to 1,234.49, and the Nasdaq climbed 0.37 to 2,037.72.
   
And the downbeat mood spilled over into Asia, with the Nikkei closing down 408.00 at 14,437.24 while the Hang Seng ended the morning session down 6.02 at 16,058.80.
   
In London, PartyGaming was the main casualty, down 6-1/4 pence at 96-1/2 as confidence in the gaming group was rocked by news the US Justice Department indicted 11 people and four companies, including BETonSports, on charges of racketeering, conspiracy and fraud.
   
The news follows the detention of the BETonSPORTS CEO Davis Carruthers on Sunday with founder Gary Stephen Kaplan charged with 20 felonies.
   
A federal court in St Louis issued a temporary restraining order Monday to prevent BETOnSPORTS from accepting bets from the US.
   
Shares in small cap BETonSport were suspended before trade started pending an announcement, while peer 888 was off 9-3/4 at 183-1/4.
   
Oil stocks were also under pressure as crude prices slipped more than 2 pct yesterday as world powers stepped up efforts to broker a truce between Israel and militants in Lebanon.
   
Despite oil clawing back some gains this morning, BP was off 5 at 635, Cairn Energy fell 30 at 2046, Royal Dutch Shell was down 16 at 1889 and BG slipped 4 at 709.

Use our professional platform to trade on margin and trade tax free. Speculate on Oil, Gold, Foreign Exchange, Worldwide Indices, Equities and Options. Go long or short on all our markets. Click here.

Elsewhere, Hanson was unwanted after the building materials group's Australian peer Rinker was cautious on US prospects as it reiterated full year guidance -- shares fell 6 at 634.
   
And BT was down 2-3/4 at 227-1/2 ahead of British Sky Broadcasting unveiling its cut-price broadband package this morning, increasing competition in an already crowded market place.
   
Analysts expect BSkyB to give away high-speed internet access to its highest spending subscribers, aping recent 'free' broadband deals from Carphone Warehouse and France Telecom's Orange.
   
In contrast BSkyB took on 1-1/2 at 542-1/2.
   
Still on the upside, defensive stocks were courted, with high dividend paying utilities being the biggest beneficiaries.
   
United Utilities took on 7 at 633-1/2 further boosted by an upgrade to 'buy' from 'hold' by Dresdner Kleinwort.
   
The broker said the group's 7 pct yield, the highest in the European utilities sector and FTSE 100, is safe until at least 2010.
   
Peers Severn Trent added 17 at 1211, Kelda took on 14-1/2 at 824-1/2 and Scottish & Southern rose 7 at 1155.
   
And BAT's defensive qualities also drew investors to the tobacco giant -- 9 higher at 1359 with Gallaher up 2-1/2 ay 851-1/2 and Imperial Tobacco 7 to the good at 1681.
   
In the drinks sector SABMiller rose 16-1/2 at 953 and Scottish & Newcastle gained 1/3 at 503 as Dutch peer Heineken NV raised its forecast for full-year organic net profit growth.
   
Meanwhile, M&A news lifted Standard Chartered, 11 higher at 1261 on reports the emerging markets bank will buy 66 pct of Pakistan's Union Bank in a 338 mln usd deal.

Spot Forex. Financial Spread Betting and CFD trading. Get a Free Market Trial by Clicking here

And Rolls-Royce found favour, 2-3/4 better at 393-1/4, after the engineer announced at the Farnborough Air Show that six Boeing 787 'Dreamliner' aircraft powered by its Trent 1000 engines have been acquired by a US leasing company.
   
The deal is worth over 300 mln usd.
   
On the second-line, HMV topped the risers, up 3-3/3 at 162-1/2 after the retailer said Simon Fox will become Group Chief Executive, effective from September 28 2006.
   
Fox will succeed Alan Giles, who will retire as Chief Executive and as a director of HMV Group at the group's AGM on September 28.
   
And Shanks group was another winner, 2-3/4 at 164, on consolidation hopes after Spain's FCC agreed to buy the landfill and related activities of Waste Recycling from Terra Firma for an enterprise value of 1.5 bln eur.
   
On a more negative note, Luminar slipped 10-1/2 at 536 after the nightclubs and restaurants group issued a weaker-than-expected trading update.
   
In response, UBS cut is price target on the group to 530 pence from 545 and lowered its 2007 pretax estimates by 7.5 pct to 40 mln and took 5.4 pct off its 2008 expectations.
   
And an uninspiring update also hit N Brown, off 2-1/2 at 217-1/2.
   
In response, Bridgewell Securities said although sales were up, a shift to more aggressive in-season markdowns is expected to take 50 basis points off the gross margins in the first half.
   
Turning to economics, investors will scrutinise the latest Producer Price Index, with the market expecting 0.2 pct gains for both headline and core inflation. 

UK Diary of Events

For a diary of key 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

Move to Selftrade and enjoy fast, efficient dealing with connections to over 15 online market makers. Deal in shares, funds, gilts, corporate bonds, covered warrants and Listed CFDs. All trades a flat £12.50. Click here for more information.

PARIS - Market data at 9.52 am:

Major indices:
   
CAC-40 up 0.64 points or 0.01 pct at 4,750.72
SBF-80 down 21.67 points or 0.41 pct at 5,283.31
SBF-120 down 2.42 points or 0.07 pct at 3,431.05

Volume: 393 mln eur
17 CAC-40 stocks up
22 CAC-40 stocks down
(Arcelor temporarily suspended from CAC-40)

Major gainers:
   
Vivendi, up 0.56 eur or 2.21 pct at 25.87, after saying it decided not to bid for France Telecom unit PagesJaunes.
   
STMicroelectronics, up 0.16 eur or 1.37 pct at 11.84
   
Bouygues, up 0.41 eur or 1.13 pct at 36.80. Deutsche Bank resumed coverage of Bouygues with a 'buy' recommendation, overshadowing a press report that said its roadbuilding unit Colas is seeking to delay projects amid a shortage of bitumen.

Major losers:
   
Atos Origin, down 7.98 eur or 18.01 pct at 36.33, after issuing a profit warning due to business problems in the UK.
   
Capgemini, down 1.45 eur or 3.72 pct at 37.56, on concerns about its UK business as the Atos news swept other IT stocks lower.
   
Publicis, down 0.13 eur or 0.47 pct at 27.50

Huge savings on Loakes hand-finished English leather shoes.  Traditionally made with welted leather soles. Click Here

FRANKFURT - Market data at 9.39 am

Major indices:
   
DAX 30 - 5,429.76, up 12.80 points or 0.24 pct
MDAX - 7,428.20, up 24.23 points or 0.33 pct
TecDAX - 592.37, up 1.14 points or 0.19 pct
DAX future - 5,455.50, up 6.00 points or 0.11 pct

Major gainers:
   
Linde, up 0.74 eur or 1.21 pct at 61.82, after it said the US Federal Trade Commission has cleared its planned purchase of UK peer BOC Group PLC after the German company agreed to make some divestitures, though analysts said this news was no surprise
   
SAP, up 1.70 eur or 1.15 pct at 149.40
   
MAN, up 0.53 eur or 1.00 pct at 53.43
   
Siemens, up 0.58 eur or 0.92 pct at 63.36
   
Adidas, up 0.27 eur or 0.76 pct at 35.59

Major losers:
   
ThyssenKrupp, down 0.18 eur or 0.69 pct at 26.07
   
BMW, down 0.21 eur or 0.55 pct at 37.84, after Deutsche Bank downgraded its stance on the issue to 'hold' from 'buy', with a price target of 41 eur from 40 previously
   
Schering, down 0.38 eur or 0.41 pct at 92.09
   
Deutsche Post, down 0.05 eur or 0.25 pct at 20.14
   
Altana, down 0.09 eur or 0.21 pct at 43.25

ADVFN is always interested to know the thoughts and views of its users.

As retail investors are aware the markets are very volatile at the moment, so in light of this we would like to find out where you think the markets are headed. 

We would be very grateful if you would take a few moments to fill out this short questionnaire (seven questions).

 Click here to take part. Many thanks in advance for your help.

Amsterdam shares AFX at a glance outlook

Forthcoming Events
   
Tomorrow
   
ASML Q2 results
      
Today's Press   
   
Nippon Steel, Mittal to continue alliances, including Arcelor (Financial Times)
    
Company News
   
Heineken ups FY organic net profit growth forecast on strong volume growth
   
Cinven, Warburg Pincus buy Dutch cable operator Casema from Carlyle, others in 2.85 bln eur deal
   
Akzo Nobel says Implanon contraceptive receives US FDA approval
   
Crucell suspends clinical development of Aerugen vaccine, sees no impact on FY sales forecast
   
Ahold appoints ABN Amro CFO Tom de Swaan to supervisory board

Market Sentiment
   
Heineken is expected to open higher after raising its full-year organic net profit growth forecast
   
Laurus downgraded to 'hold' from 'buy' at Kempen

Forex

ADVFN Services