UK/Euro Financial Market Daily Morning Briefing 19-03-2007

£105,000 profit! spread betting UK shares with the Intelli-Trend system!
Click Here to find out more.

London shares open higher as Barclays M&A talk lifts banking sector

Leading shares opened higher as sector consolidation hopes in the banking sector offset caution ahead of this week's UK budget and US rate decision on talk Barclays could merge with Dutch peer ABN Amro, dealers said.
   
At 9.15 am, the FTSE 100 was 41.0 points firmer at 6,171.6, mirroring the positive wider market. Volume was solid with 342 mln shares changing hands in 54,782 deals.
   
Financials helped to lead blue chips higher on weekend press reports Barclays made an informal merger approach to ABN Amro to create a global banking powerhouse worth 80 bln stg. This morning, in a brief statement to the stock exchange, Barclays said "an announcement clarifying the position will be made before the open of business tomorrow".
   
In response, broker Keefe, Bruyette & Woods Ltds said an approach by Barclays is realistic but added while it would expect the UK bank to have talks, this is still a long way from a potential deal. As for a price, the broker said Barclays could offer up to 31.3 eur per share.
   
At the same time, The Observer said the move could leave Barclays vulnerable to a bid, with Wachovia and Citigroup long touted as potential predators. Barclays gained 4 pence at 686-1/2, Lloyds TSB took on 16 at 550, Standard Chartered gained 24 at 1,419 and HBOS rose 12 at 1036.
   
Still in the sector, Prudential toped the riser's board after The Observer said the 2.2 bln stg Tosca fund, an activist hedge fund, is building a stake in the insurance giant, increasing speculation it could face shareholder pressure to break itself up.
   
Prudential took on 24-1/2 at 706-1/2, Friends Provident rose 3-1/4 at 197-1/4 ahead of full year results tomorrow, Legal & General firmed 1-3/4 at 152, Aviva added 8 at 741 and Standard Life was 3 better at 296-3/4.
   
In earnings, Wolseley gained 35 at 1,234 after the building materials giant's forecast-busting interim results eased ongoing worries over the state of the US housing market.
   
Wolseley's pretax profits fell 13.4 pct in constant currency terms to 285 mln stg but still came in ahead market expectations and overshadowed remarks the soft US housing market would continue for the rest of the 2007.
   
In response, Merrill Lynch reiterated its 'neutral' stance and said given recent weakness, potential private equity speculation and large short trades going into these results, it expects the shares to stage a strong recovery.
   
The news also provided a fillip to building conglomerate Hanson, up 12-1/2 at 809, which has also been dogged by fears over the sub prime market in America.
   
On the high street, Alliance Boots took on 23-1/2 at 1,027-1/2 on reports private equity group KKR is mulling a revised bid of up to 1,060 pence per share for the chemist and beauty chain, The Independent on Sunday said.

New dedicated FX platform with spreads from 2 pips, 1-click dealing and zero commission.
Browser-based technology with no downloads - UK regulated
Try our free demo account and charting package today - click here

Sentiment was further boosted after The Sunday Express said Apax Partners is making early preparations to make its own bid for the group, which already rebuffed a shock 10 bln stg takeover approach by deputy chairman Stefano Pessina.
   
In contrast, other retailers fell back, giving up much of last week's M&A-fuelled gains, with William Morrison down 4 at 314-1/2 Sainsbury 1-1/2 lower at 554-1/2 and Tesco off 3/4 at 431.
   
Sainsbury slipped despite weekend reports a second consortium, including Bain Capital, Apollo Management, and Vornado Realty Trust, a New York real estate investment trust, is mulling a bid for the supermarket group.
   
Meanwhile, original suitor CVC Capital is working on an 11 bln stg bid for Sainsbury according to The Sunday Times, while Reliance Industries, India's largest private sector group is "taking a look" at a possible stake in Sainsbury, its Saturday sister paper reported.
   
William Morrison was also hit as ABN Amro downgraded it stance to 'hold' from 'buy' and Credit Suisse moved to 'neutral' from 'outperform' following the recent share price rise and strategic review.
   
Elsewhere, Imperial Tobacco lost 34 at 2,296 on fears the group could be dragged into a bidding war for Franco-Spanish rival Altadis. The Sunday Telegraph said the UK group is poised to return with a new bid as early as this week after its 31 stg-a-share offer was rejected on Saturday. This offset hopes Altria, which owns Philip Morris cigarettes, could turn the tables and bid for Imperial itself.
   
Oil stocks also weighed as crude prices languished around 57.30 usd a barrel, following sharp falls on Friday, after OPEC kept its production quotas unchanged. Royal Dutch Shell was down 11 at 1607, BG lost 2-1/2 at 686-1/2, and BP eased 1-1/2 at 510.
   
And in pharmas, AstraZeneca was down 7 at 2,874 after a report in The Independent on Sunday said nearly a quarter of the group's turnover could be wiped out by legal challenges to the protection on its best-selling drugs.
   
On the second-line, Laird Group rose 42-3/4 at 505-1/2 after the engineer reported underlying profits rose 33 pct to 73.3 mln stg, alongside news it is to sell its Security Systems arm to Lupus Capital for 242.5 mln.
   
In response, Bridgewell Securities reiterated its 'buy' advance and said the results were slightly ahead of its forecasts. The broker added investor interest is set to be focused on the disposal of Security Systems, which has been executed "at a good price" and which it sees as a "very positive move".
   
And First Choice Holidays climbed 22 at 306 on confirmation it is to merge with Germany's TUI AG's tourism unit. This morning, First Choice announced the newly merged travel operation, called TUI Travel PLC, will be listed on the LSE and headed by Peter Long, who heads First Choice.

CFD trading with limited risk.
New SG Listed CFDs provide you with all the power and flexibility of traditional CFDs, but with strictly limited downside risk.
Click here for further info on SG Listed CFDs or to request a product guide.

On the downside, HMV 2-3/4 at 120-1/2 after the music and book retailer was downgraded to 'sell' from 'neutral' at Goldman Sachs. The broker also added HMV to its Pan-Europe Sell List, warning the group's new strategy is unlikely to offset structural pressures surrounding the business.
   
Meanwhile, Wall Street ended another volatile week lower as investors mulled mixed economic data ahead of the Federal Reserve's rate decision this Wednesday.
   
Stronger-than-expected consumer price inflation hit hopes the Fed will cut the cost of borrowing, with most pundits now expecting the Central Bank to hold the overnight lending rate at 5.25 pct. The Dow Jones industrial average fell 49.27 to 12,110.41, the S&P 500 lost 5.33 to 1,386.95 and the Nasdaq was down 6.04 to 2,372.66.
   
But Asia shook off the downbeat mood as Tokyo's Nikkei 225 index closed 265.40 points higher at 17,009.55, while Hong Kong's Hang Seng ended the morning up 182.37 at 19,135.87.
   
Meanwhile, in economics, Chancellor Gordon Brown's swansong Budget and the minutes of this month's Bank of England rate-setting committee, both due on Wednesday, will take centre stage.
   
Brown, thought to be a shoe-in to become PM when Tony Blair quits some time before the Labour Party Conference in September, is expected to maintain his most recent GDP forecast in last December's pre-budget.
   
Then Brown forecast the UK economy will grow by between 2.75-3.25 pct this year, above the 2.7 pct recorded in 2006.
   
And the minutes of the March 8 Monetary Policy Committee meeting, when rates were left on hold at 5.25 pct, will be closely scrutinised, particularly given that another hike is expected in the coming months.
   
The market will be looking to see whether the MPC's hawks Tim Besley and Andrew Sentance still voted for a rate hike, while focus will centre on the reaction to the recent volatility on equity markets.

US Summary

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

UK Diary of Events

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

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.

PARIS - Market data at 10.30 am:

Major indices:
   
CAC-40 up 36.78 or 0.68 pct at 5,418.94
SBF-80 up 60.05 or 0.89 pct at 6,818.20
SBF-120 up 28.00 or 0.71 pct at 3,979.27

CAC-40 volume: 1 bln eur
33 CAC-40 stocks up
7 CAC-40 stocks down

Major gainers:
   
Dexia up 0.84 or 4.1 pct at 21.32 on talk it is a possible alternative suitor for ABN-Amro, which is reported to have received a 'white knight' merger approach from Barclays
   
Societe Generale up 3.36 or 2.77 pct at 124.43 as Barclays/ABN Amro speculation lifts sector
   
BNP Paribas up 1.40 or 1.84 pct at 77.60
   
Thomson SA up 0.34 or 2.47 pct at 14.52
   
Vinci up 2.22 or 2.06 pct at 109.50 after report Mittal/Pinault preparing takeover bid
   
Klepierre up 5.97 or 4.69 pct at 133.35, upgraded to 'buy' from 'hold' at SG, 156 eur target

Major losers:
   
Atos Origin down 1.12 or 2.21 pct at 49.63 after jump of more than 25 pct last week on takeover speculation
   
Lagardere down 0.28 or 0.49 pct at 56.32 after two days of gains

Most active stocks:
   
Societe Generale, 130 mln eur
   
BNP Paribas, 75 mln
   
Axa, 70 mln
   
Total, 65 mln
   
Sanofi-Aventis, 50 mln
   
Vinci, 45 mln

Whether a complete beginner or an established trader;
 
TradeWin is a simple to use, bespoke spread betting software, that any one serious about share trading MUST SEE!!!
 
Click here to find out more and view our FULL trading history since 2002...

AMSTERDAM - Market data at 10.33 am

Major indices
   
AEX                 487.89, up 5.75 points
AMX Midcap          66.79, up 2.82 points
Government bonds    mainly lower    

Major gainers:
   
ABN Amro jumped 7.44 pct to 29.32 following weekend reports Barclays has approached the Dutch bank with the intention to buy. An analyst at FBS Bankiers said earlier merger talks had not led to anything, and synergies between ABN Amro and Barclays are not that interesting.
   
Midcapper Ordina was up 3.93 pct to 16.94 and ASMI strengthened 2.24 pct to 16.45.
   
ING lifted 2.0 pct to 30.63 and Aegon put on 1.66 pct to 14.67.
   
Fortis advanced 1.74 pct to 31.50 after an upgrade from Credit Suisse.   

Hagemeyer rose 1.77 pct to 3.45 after peer Wolseley released interim results beating market expectations. SNS Securities said the results gave an encouraging vision of markets in the US and Europe. The Dutch broker repeated its 'buy' rating on Hagemeyer, saying the company will continue to 'substantially improve' profitability levels, and that it remains under-valued versus its peers.
   
Pharming was 1.21 pct to 3.34 after SNS Securities reinitiated coverage at 'add' with a price target of 3.50 eur as the company's lead product moves towards launch.
   
Heineken added 1.11 pct to 38.17 after Lehman increased its rating to 'overweight' from 'equal-weight' and its target to 42 eur from 39.    

Vedior went 1.05 pct higher to 16.40.

Major losers:   
   
Wereldhave was down 3.11 pct to 110.0.
   
Univar went 2.10 pct lower to 41.0 after Brenntag made a competing bid for Chemcentral, which had alrady received a bid from Univar. Rabo Securities said a takeover of the company by Brenntag would clearly be negative for Univar.
   
ASML was down 1.12 pct to 17.69.
   
Arcelor Mittal slid 1.0 pct to 37.57.
   
Unilever shed 0.75 pct to 21.31.
   
Royal Dutch Shell weakened 0.38 pct to 23.79 and SBM Offshore went off 0.54 pct to 25.94.

…imagine owning a luxury bespoke villa in the most prestigious and private estate in St Lucia. Enjoy stunning views out to Martinique and sunsets over the Caribbean Sea.  Click Here.

FRANKFURT -  market data at 10.46 am  

Major indices
   
DAX - up 60.57 points or 0.92 pct to 6,640.44
MDAX - up 125.13 points or 1.30 pct to 9,776.50
TecDAX - up 10.08 points or 1.25 pct to 815.39
DAX futures - up 59.00 points or 0.89 pct to 6,700.00

Major gainers
   
TUI, up 1.37 eur or 8.30 pct at 17.88, after the tourism and shipping conglomerate said that it plans to merge large parts of its tourism operations with UK-based First Choice Holidays PLC
   
Commerzbank, up 1.12 eur or 3.69 pct at 31.45, on merger speculation in the financial sector and after banks are enjoying a rebound after last week's string of bad news in the subprime lending market
   
Deutsche Postbank, up 2.15 eur or 3.57 pct at 62.44, after its fourth quarter results released earlier this morning largely exceeded analysts' expectations
   
DaimlerChrysler, up 1.25 eur or 2.31 pct at 55.26, after shares in the automaker were upgraded to 'neutral' from 'sell' by Goldman Sachs, while the same broker has also upgraded its coverage view on the European auto sector to 'neutral' from 'cautious'
   
Deutsche Bank, up 1.80 eur or 1.91 pct at 95.84, after Germany's largest bank enjoyed upgrades from Credit Suisse and Citibank
   
Major losers
   
EON, down 0.27 eur or 0.27 pct at 44.52
   
Bayer, down 0.01 eur or 0.02 pct at 44.54

Other Major Movers:
   
MDAX-listed DEPFA and Salzgitter, up 0.25 eur or 1.95 pct at 13.06 and up 1.50 eur or 1.48 pct at 103.00, as both companies are likely candidates to climb into the DAX should a merger between TUI and First Choice succeed

Forex

ADVFN Services