UK/Euro Financial Market Daily Morning Briefing 19-07-2006

London shares remain buoyant assisted by wave of positive broker comment

London shares remained up in early deals assisted by a strong run on Wall Street overnight following a healthy set of corporate figures across the Atlantic, meanwhile upbeat broker comment helped bounce the market back into positive territory, dealers said.
   
At 9.10 the FTSE 100 was up 27.5 at 5,709.2 while the FTSE 250 was also up 58.1 at 9,026.9. Volume was light with 219.4 mln shares passing hands in 31,307 deals.
   
Meanwhile, overnight on Wall Street stocks finished the day strongly thanks to better-then-expected corporate earnings, including Coca-Cola and United Technologies.
   
The Dow closed up 51.80 at 10,799.2 while the NASDAQ finished the day better by 5.50 at 2,043.22.
   
In Asia, share prices rebounded after the Nikkei slumped over 400 points yesterday. Bargain hunters stepped back into the fray and with the market also supported by Wall Street's overnight rise.
   
However, while the broader picture was bright, there was a reluctance to push the upside too aggressively ahead of US June CPI data. Federal Reserve chairman Ben Bernanke's testimony to Congress is anticipated later today as are a string of earnings reports from US high-tech firms such as Intel Corp, Apple Computer and Microsoft, due out this week.
   
The Hang Seng ended the morning up 99.77 points at 16,143.71 while the Nikkei finished the session up 63.02 points at 14,500.26
   
Meanwhile, oil prices rebounded in Asia as continued concern about Iran's nuclear program and Israel's attacks on Lebanon kept the market volatile, dealers said.
   
New York's main contract, light sweet crude for delivery in August, was at 73.91 usd a barrel, up 0.37 usd from 73.54 usd in late US trading overnight. Brent North Sea crude for September delivery was up 0.58 usd at 74.94 usd.    

In corporate news, Yukos, the embattled Russian oil group, failed its attempt to halt the London flotation of rival Rosneft.

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The UK High Court rejected Yukos' application for a judicial review of the Financial Services Authority's decision to admit Rosneft shares for trading on the London Stock Exchange.
   
The shares are due to begin trading on the LSE today. They debuted on the Moscow stock market on Monday.
   
Rosneft, built on the ruins of the Yukos empire, raised 10.4 bln usd from the initial public offering, the largest ever in Russia.
   
In London, the market was bolstered by positive broker comment. Centrica was a key feature, up 5-1/4 at 282-1/4, having been upped to 'overweight' from 'underweight' by JP Morgan.
   
The stock was also helped by yesterday's news that Russian oil giant Gazprom's UK unit expects to take a "significant" share of the domestic gas market in the "next couple of years" via a "rapid expansion".
   
Gazprom has been linked with a potential purchase of the British Gas owner.
   
Tate & Lyle was also a key feature after it was upgraded to 'neutral' from 'sell' by Goldman Sachs in a biofuels and food processors sector review.
   
However, Goldman Sachs reiterated its cautious view on the food sector, saying the review of the EU Biofuels Directive and the potential mandating of biofuel mix in fossil fuels in Germany could accelerate the development of biofuels in Europe, while rising crop prices for wheat, corn and sugar could increase cost pressures for food producers.
   
In other news ICAP soared after a strong trading update leading to a reiteration as 'overweight' by Bridgewell Securities.
   
The broker noted that it expects the strong start to 2006 to continue for some time to come, as volatility across asset classes shows little sign of slowing.
   
At the top of the leader board Corus surged almost 3 pct, up 11 at 414, as the steelmaker was boosted by positive broker comment and news peer ThyssenKrupp raised guidance after hours last night.
   
Last night Germany's largest steelmaker revealed it expects third quarter earnings before tax to surge more than 30 pct.

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On the downside PartyGaming was still dazed by the recent online gaming scandal, down 3-1/4 at 82, taking it to the top of the losers board.
   
Meanwhile oil stocks eased even though crude rallied with BG Group down 7 at 706, BP lighter by 2 at 632-1/2 and Royal Dutch Shell easier by 3 at 1,887.
   
The sector was hurt by news that BP is closing 12 oil wells on Alaska's North Slope as a precaution after whistleblowers alleged more than 50 were leaking. The action came after workers told the Financial Times about the leaks, according to the newspaper.
   
On the second tier Informa was a strong player, up 10-1/4 at 414-1/4. The publisher and conference organiser said it has performed well in the first half and is trading comfortably in line with its expectations.
   
In a pre-close update, CEO Peter Rigby said: "Events, Performance Improvement and Publishing are all delivering the organic growth we targeted. We move into the second half confident of another good financial performance in 2006."
   
Meanwhile computer services company LogicaCMG pleased investors up 3-1/4 163-1/2, as trading in the first half was well ahead of last year and in line with its May trading update.
   
In response, Deutsche Bank reiterated its 'buy' advice as it said the trading statement flags robust demand. In a note to clients, the broker said that, following recent sector warnings, this trading statement provides some relief.
   
In the leisure sector JD Wetherspoon gained after the pubs group said it expects results for the year to July 30 to be at the top end of market forecasts.
   
In response, Dresdner Kleinwort raised its price target on the group to 415 pence from 360 as it reiterated its 'hold' advice. At the same time, the broker upgraded its 2006 and 2007 pretax forecasts on the group by 10 pct to 57 mln stg and 16 pct to 60 pct respectively.
   
On the downside, Rightmove remained under pressure, down a massive 68 at 284, almost 20 pct, as Panmure Gordon downgraded the stock to 'hold' from 'buy' following yesterday's news that HIPs will not be mandatory in the UK.
   
Reacting to yesterday's news, Panmure Gordon downgraded Rightmove, saying it now places zero value on HIPs from a former 180 mln stg value, as it thinks it is safest to be initially conservative.
   
Countrywide was also hit by the news down 27-3/4 at 398.

UK Diary of Events

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US Summary

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PARIS - Market data at 10.06 am:

Major indices:
   
CAC-40 up 17.02 points or 0.36 pct at 4,751.56
SBF-80 up 43.65 points or 0.83 pct at 5,283.42
SBF-120 up 13.11 points or 0.38 pct at 3,431.18

Volume: 494 mln eur
28 CAC-40 stocks up
10 CAC-40 stocks down
1 CAC-40 stock unchanged
(Arcelor temporarily suspended from CAC-40)

Major gainers:
   
STMicroelectronics, up 0.32 eur or 2.72 pct at 12.09
   
Capgemini, up 0.79 eur or 2.14 pct at 37.70, recouping yesterday's losses after today's positive sales report from LogicaCMG dispelled fears that Atos Origin's problems in the UK market might encompass other IT service companies
   
Thomson, up 0.22 eur or 1.80 pct at 12.42. Yesterday it said it won a contract to supply equipment for a new French satellite TV news channel

Major losers:
   
Spir Communication, down 5.80 eur or 4.83 pct at 114.20, after getting two downgrades following its prediction of slower sales growth
   
Essilor, down 0.35 eur or 0.46 pct at 75.15, ahead of tomorrow's second-quarter sales report
   
Bouygues, down 0.10 eur or 0.27 pct at 36.32

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FRANKFURT - Market data at 10.11 am

Major indices:
   
DAX 30 - 5,421.80, up 24.95 points or 0.46 pct
MDAX - 7,461.27, up 57.39 points or 0.78 pct
TecDAX - 590.69, up 7.63 points or 1.31 pct
DAX future - 5,449.00, down 1.50 points or 0.03 pct

Major gainers:
   
ThyssenKrupp, up 0.68 eur or 2.66 pct at 26.22, after the German steel conglomerate raised its full-year earnings forecast and said it expects third-quarter pretax profit of more than 750 mln eur, beating many analysts' estimates, which prompted an upgrade to 'outperformer' at LRP
  
Commerzbank, up 0.43 eur or 1.66 pct at 26.37
   
Hypo Real Estate, up 0.71 eur or 1.65 pct at 43.69
   
Fresenius Medical Care, up 1.18 eur or 1.30 pct at 92.00
   
MAN, up 0.67 eur or 1.28 pct at 52.83

Major losers:
   
E.ON, down 0.55 eur or 0.64 pct at 85.80
   
Altana, down 0.20 eur or 0.46 pct at 42.85
   
Deutsche Post, down 0.10 eur or 0.50 pct at 19.77
   
RWE, down 0.03 eur or 0.05 pct at 63.69
   
BASF, down 0.03 eur or 0.05 pct at 60.72

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AMSTERDAM - Market data at 10.19 am

Major indices
   
AEX                 429.76, up 2.96 points
AMX Midcap          562.09, up 8.20 points
Government bonds    Flat to lower

Major gainers
   
ASML soared 3.70 pct to 15.40 eur after reporting what some analysts called "blow-out" second quarter earnings, dealers said.
   
Hagemeyer added 3.28 pct to 3.46 eur, with investors picking up the stock after yesterday's sell-off, dealers said
   
LogicaCMG added 2.55 pct to 2.41 eur after releasing a solid trading update and announcing a 2-year software IT-services contract from the Dutch government
   
TomTom put on 2 pct to 27.03 eur
   
Philips gained 2.01 pct to 23.36 eur
   
Akzo Nobel gained 1.91 pct to 41.12 eur after an upgrade to 'buy' from 'add' at SNS Securities, a day ahead of second quarter earnings
   
Second-liner Stork added 1.20 pct to 36.14 eur after an upgrade to 'accumulate' from 'hold' at Delta Lloyd Securities
   
Local issue Unit 4 Agresso won 2.30 pct to 14.69 eur after announcing the acquisition of two companies in Germany
   
Major losers
   
Royal Dutch Shell edged 0.04 pct to 26.51 eur amid easing oil prices
   
Rodamco Europe shed 0.13 pct to 76.95 eur   
   
Buhrmann was down 0.40 pct to 10.06 eur
   
Wolters Kluwer dropped 0.80 pct to 17.31 eur

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